On today’s show I chat with Jeff Bussgang, Co-Founder and General Partner of Flybridge Capital Partners, a Boston based VC fund with 700M under management.

As you know from previous episodes, I’ve been interviewing different VCs on the show with the goal to highlight different geographies. Jeff’s on to represent Boston.

Along with being a VC, Jeff is the author of “Mastering The VC Game” and a professor at Harvard Business School, which has helped him become a true expert on VC. He’s also a bit of a mentor to the current generation of VCs. A lot of people in the industry look to him for guidance, so I’m honored to have him on the show.

As if Jeff already doesn’t do enough, he also actively invests in Harvard grads through a vehicle called the Graduate Syndicate and is a Co-Founder of Hack Diversity - a non-profit focused on helping Black and Latinx/e/a/o technologists find their way into tech companies.

During the chat we talk about how Flybridge Capital operates, what’s going on in the Boston VC game, some of his favorite lessons that he teaches in class, and much more.


Show Links

• Follow us on Twitter: @bussgang, @mpd
• Guest Links: Flybridge Capital, Graduate Syndicate, Hack.Diversity, Jeff’s Book - Mastering the VC Game‍
• Podcast Links: YouTube, Twitter, Facebook, LinkedIn

Transcript

MPD:  I'm very excited today to have Jeff Bussgang on the show.

Thanks for making time today. Yeah. Thank you. Uh, so to start off, would you mind giving us an overview of what you're teaching at HBS? I suspect it has to do with venture capital and entrepreneurship, but maybe if we could start with that dimension of your life. 

Jeff Bussgang: [00:02:26] Yeah, sure. Mark. I do three things at HBS in terms of my teaching.

One is I teach a class for entrepreneurs called launching tech ventures, LTV, which is focused on pre product market fit startups, case method. As all HBS classes are we study early stage startups and examine. And deconstruct how they search for product market fit. And then the second thing I do is teach a program for aspiring venture capitalists called the rock venture partners program, which is for the students who want to be VCs.

And that's a year long internship, independent study seminar. And then the third thing I do, which is new is I created a class in the wake of the murder of George Floyd. This last June, I created a class with two black faculty colleagues called scaling minority businesses. Where we worked in a field fashion with 10 black owned businesses in the Boston area who were scaling and examine the struggles and opportunities that black owned business, uh, uh, uh, leaders have as they embark on their, their own journeys as entrepreneur.

MPD: [00:03:34] I'm fascinated to hear more about that. Let's, let's dovetail back on that topic in a little bit, because I think it'll line up nicely with hack diversity. Um, why did you become a professor? How did this happen? Right? A lot of, uh, VC folks are out there, uh, scaling their pocket books and building wealth and playing the lottery of gambling and on companies.

Um, what about this, this kind of dimension of your life attracted you? 

Jeff Bussgang: [00:04:02] I have to say it happened kind of organically. I don't know if you've heard this parable mark about how to boil a frog. Does anybody. Yeah, but just say it for folks who don't know it, heard this story, the way you boil a frog, as you put it in tepid water, and then you frog acclimates you slowly, slowly turn up the heat frog, acclimates, turn up the heat further.

And eventually you boil the frog and the frog never jumps out of the hot water. And that's kind of what happened to me at HBS. I I'm a grad of the school. I went to Harvard college. Which is where I met my wife. I then went to work for a couple of years in New York and then came back to Boston for Harvard business school.

And I embarked on an entrepreneurial career and a VC career here in Boston, but I always stayed close to the Harvard community and to the HBS community. And I was invited to do various things, speak on occasion, meet with students, work with faculty and, you know, little by little I, I got involved in. More engagement with the faculty, helping create a new course, this, this launching tech ventures course, which, uh, a very, uh, capable, tenured faculty member, Tom Eisenmann created and asked for my companionship and, and collaboration in that course.

And then he asked me to co-teach the class with him. And then he said, Hey, that was great. And I said, yeah, it was really fun. I think my partners would support my doing it again. He said, wonderful. It's your course now, buddy. And he kind of got handed me the football bait and switch. And so that's sort of the process, the real answer to your question of why, because I guess the why is more important than the, what is, I just love teaching?

I love mentoring. It's the part of the investment work that I really love is mentoring entrepreneurs and, and coaching and teaching. And. This is an amazing community that I'm just so privileged to be a part of because I stand on the shoulders of this amazing brand and this amazing admissions office where I get this Peter pan opportunity.

I stay young every year having done it now for 10 years, the students are the same age and I feel like I'm the same age. Right. And, um, and I just, you know, if you want to know what's going on and, and startups in tech and innovation. Ask 100 HBS students or Stanford students or MIT students. Cause they know more than any of us.

So it's a, it's a, it's been a ton of fun. I learned a lot. I've learned a tremendous amount and it's been incredibly rewarding on, on every dimension. 

MPD: [00:06:28] Yeah. I'd like to ask you about that. What have you been learning from this process? Because obviously it's a professor. It's about what you're teaching others, but I have a feeling for someone who's intellectually curious as you are, I've known you for a long time.

Um, what do you, what do you get out of this outside of the joy of the mentorship? 

Jeff Bussgang: [00:06:43] Well, first of all, you can't teach something unless you know, it deeply. And when you think, you know, a topic, product, market fit, cohort analysis, AB testing, any of the things that we as entrepreneurs or VCs know, maybe at a surface level, you don't really know those topics until you get in front of a hundred, incredibly smart, really brilliant students, uh, who are MBAs, who have come from Uber and.

Facebook and Google, and they really know the topic and you get up there and try to teach it to them, man, you better be ready. So the first thing is it's forced me to go to school and really study more deeply my practice, because unless you really think profoundly about your practice and deconstruct what you do and the entrepreneurial journey and the investor journey, I don't think you can really, really teach it.

Um, the second thing that's been really fun for me is now 10 years in, I have. Uh, 1500 students, all of whom are now running companies, investing in companies, executives at big tech and, you know, mid-size growth tech companies. Well, that's been a really fun network and information source. I find out stuff about my own portfolio companies yesterday.

I was on a call with one of my former students who told me something about one of my portfolio companies. I didn't know that he knew and heard through the grapevine. I hear about. Deals. I, we, I invest in a lot of those former students as we'll talk about I'm sure. And it's just been an incredibly rich and rewarding on so many levels.

MPD: [00:08:18] So you're, you're learning a lot. You've got 1500 spies deployed throughout the market. And, um, you know, w when you're, when you're going through this, has there been a moment where there was a student who caught you off guard taught you something you didn't expect to learn maybe in class or otherwise?

Jeff Bussgang: [00:08:36] Well, I would say one of the things I've really benefited from is the international exposure. I have spent my entire life living in the U S I spent my entire life except for two years in New York, living in Boston. So I like to think I'm relatively sophisticated and educated, but I'm really pretty parochial when it gets right down to it.

And a third of our class is global international, and they are teaching me about what's happening in Indonesia, where I've now invested in a number of companies what's happening in Egypt and the middle east, north Africa region, where now I've invested in a number of companies. One of the biggest areas of investment for flybridge in the last 10 years has been Latin America, Brazil, south America, throughout that region, we now have.

A unicorn down there, maybe a second unicorn about to happen and a number of portfolio companies down there. And I've just learned a ton about those regions. So I guess what's really impressed me. And what I've been able to glean is just a much more global view. And I've just been really surprised by what, how fast developments have been in those regions.

I, I screwed up in that. I didn't invest in Coupang if people know the story. Bomb Kim who dropped out of HBS after his first year, he pitched me on the idea of the group on, of Korea, which I told him was a dumb idea. And he thought it was a dumb idea. Eventually pivoted to be the Amazon of Korea and $70 billion of market cap.

And 10 years later, he's sitting on top of them and create incredible enterprise. And so I just have the privilege of meeting these amazing students that come through here, you know, the. In our business and the venture capital business. And I think this is true in at Harvard business school. In general, you never know the people who walk through your door, you never know what they're going to become.

And you may intersect them at 25, 26, 27 years old, and see them at a point in time where it's clear, but man, you better treat them with respect and you better be thoughtful about how you treat, uh, how you handle them and treat them because you never know what they're going to become. The next mark Zuckerberg next, Jeff Bezos.

The next. Bomb cameras are going to be those 25 year old entrepreneurs walking through your door, asking for your help. I feel 

MPD: [00:10:55] that lesson also holds for venture capital, right. You know, we're sort of in an impossible situation. As you know, we have to pass on 98, 99% of the companies that walked through the door, but you have to do it as gracefully as possible because some of those people are going to be Titans.

You want to be friends with them. You don't certainly don't offend them just cause you have to say no because that's the business need. So that's your 

Jeff Bussgang: [00:11:17] job. Yeah, you interviewed Peter Boyce, who I met Peter when he was a Harvard college junior across the river, just computer science, undergrad, super eager, bursting with potential.

And I know Peter on your show made a reference to the next billion dollar company that a 16 year old might create. I think we all, we're all very humbled by what amazing entrepreneurs are building. And so I think in our position, again, as an investor or as a VC, you gotta be really respectful of. Of the entrepreneurial journey and the individual entrepreneurs on that journey.

MPD: [00:11:51] Totally. I love that. Is there a lesson in one of your classes or a session that's either your favorite or the most popular is if you had to pick one nugget that you teach, that's the thing, the thing you have to hear, what is it like? Give us the free HBS, 

Jeff Bussgang: [00:12:09] $70,000 worth, I guess I'll give you two, if I can.

One nugget is. The entrepreneurial journey is all about setting up experiments across your business model experiments and your value prop experiments, and your go to market experiments in your pricing, profit formula, business model, core elements. And so just being great at running experiments and being great at picking what experiments to run is I think the core essence of entrepreneurship that some entrepreneurs don't fully appreciate or understand they want to.

You want to jump right into the build before they think more scientifically about the experimentation machine that they're building and the experiments they want to run. I think Eric recently in the lean startup did a great job of teeing this up. And Steve blank has written about this a lot as well, but in my class, we really drill in on the selection and execution of experiments as part of your journey.

The second thing, I'd point out. And this is, I kind of evolved into this is that there's no one playbook to success. A lot of people come into my class and they want to know, like, tell me the playbook, what's the answer. And he's like, many of the people you deal with, they're very smart. They're used to getting all A's, they're very accomplished and they, they get to where they are because they're skilled at figuring out answers to hard questions.

And I think what's really makes the fun of the entrepreneurial. Process is there's no single playbook. And I, I bring this to life since I know you had your own submitted from like a Vivaan. I bring this to life within Israeli startup called light tricks. And I don't know if you know, light tricks, it's the maker of base tune, which is digital makeup.

It's the app that allows you to look better before you get on social media or get on podcasts by the way. I don't use it for this, but anyway, as you can tell. But, um, but, but face tune, uh, when it was started by five PhDs out of Jerusalem university, so they weren't, you know, they were such outsiders. They weren't even in Tel Aviv, which is if you're going to be an announced, you know, in Israel, like that's the hub, they were outside of the hub and through slum, none of them were business people, five PhDs, and they started a consumer app.

Nobody would back them. So they raised no money. So they did everything different. They re they launched an app that was a paid app, not a free app. They spent every dollar on marketing and customer acquisition. They didn't get VCs, they didn't get advisors, they didn't do an MVP. They just spent a long time building this beautiful, beautiful, very sophisticated machine vision based app and fast forward, six, seven years later, it's a billion dollar unicorn.

And worth, uh, you know, it could have end up being multi-billion dollars in an IPO backed by insight eventually. And it's, I sort of use them as a great case study of there's no single playbook. We can tell you the playbooks of many of the successful companies, and you can begin to discern patterns, but every situation is different.

Every entrepreneur, every market, every moment in time is different. And so to be great in this business, you've got to have the. The mindset, the growth mindset, the Carol Dweck talks about and just recognize there is no playbook. You've always gotta be learning and always adapting. 

MPD: [00:15:33] It feels like the second insight really reinforces the first.

Um, the, the first insight very much resonates with me. Uh, we always talk about, uh, entrepreneurship is a science experiments. I think the lean startup method, most of those things are really just re application of the scientific method. That's right. But, you know, the, the journey is a choose your own adventure, but if you're applying the method, it doesn't matter what the outcome of the path is.

You just follow the path, right? You follow what the science illuminates for you. So I like those two together. So I think this is one of the hardest things for people to grasp when they get so passionate about their entrepreneurial adventure, it becomes art for them. It stops being it. It's not science because they're just too passionate about it.

When it, you to be ruthlessly objective, 

Jeff Bussgang: [00:16:17] and look, there is a little bit of art. In fact, I don't know. I think I was telling you before we got on I, my son is doing a gap year. And as part of his gap year, I told him he's on the road and living out of a van. And I said to him, you gotta read this book, Zen and the art of motorcycle maintenance.

And I decided, well, shit, I gotta reread it before I impose it on him. Cause I read it when I was his age. And I remember it being very impactful and I re-read the book. And just over COVID. And I, I realized a few nuggets in there that are very relevant for the entrepreneurial journey, because as he talks about in that book, Robert piercing, the scientific method, and he says, but the whole, the hard thing is deciding what experiments to run, because there are an infinite number of experiments you can run.

The part of our business is choosing the right experiments to run, and the science is executing those experiments really effectively and building an organization that. Is strong and experimentation execution, but there is an art to choosing experiments and that's where strategy and instinct and domain knowledge again.

MPD: [00:17:20] Beautiful well said. So at this point, Jeff, are you more VC or professor? 

Jeff Bussgang: [00:17:27] I like to say a hundred percent flybridge and 20% HBS and my math isn't as good as it used to be. The truth is that I think you're oversubscribed. I'm a little oversubscribed and over-scheduled, but the truth is I'm still mainly, uh, dedicating my main work to my VC work at flybridge.

And my work at HBS is, uh, additional, it turns out very synergistic, as I mentioned to you, but I, but I'm mainly at flybridge great 

MPD: [00:17:58] if everyone listening and overview of flybridge, I think it'd be helpful for folks to know a little bit more about the firm. 

Jeff Bussgang: [00:18:04] Yeah, we started the firm, my co-founders and I just a little under 20 years ago now, um, two of my partners had been previously at gray lock as young at the time, young Boston, Greylock partners.

And I had been twice an entrepreneur backed by Greylock. We all knew each other at business school. We were a year apart. And, um, formed the firm to focus on being great early stage institutional investors on the east coast. We opened a New York office pretty shortly afterwards and have been investing now out of our sixth.

Sorry, we're on our fifth fund. We're going to raise our sixth fund next year. And, um, it's been a great ride. You know, we've had, we've had, uh, as you noted earlier, uh, you know, a little over 700 million under management, so we're still small. For general partners, myself chip hazard, who, um, was one of the Greylock partners who was my co-founder and then two partners who are younger, Jesse Middleton.

Who's a former, we work exac who is based in New York and has been with us for five years. And Anna Palmer who just joined us last fall, who is a former entrepreneur who we had backed previously and who also formed X factor ventures with us, a fund focused on female founders. That she and my partner chip formed about four years ago.

And, um, you know, we do seed investing. It's pretty, it's pretty fun and a privilege to work with entrepreneurs right at the beginning and be that first check million dollars, $2 million to help them go from seed to scale. 

MPD: [00:19:41] Is there a particular strategy, obviously within seed and east coast? Is there something a little bit more specific that you focus on?

And I find that VC websites, as you know, are. Impossible for entrepreneurs to navigate. They all say the same thing. When you talk to the VCs and you're talking shop, you kind of find out that everyone's got a little different flavor that they're looking for. It may not be something as simple as a sector.

Geography. What does that for 

Jeff Bussgang: [00:20:03] you guys? Yeah, it's evolved over time because we are the Matic. As you note, but themes have moments. So 10 years ago, we were, we're very into developer driven and cloud, and that led to the investment Mongo DB, and you know, where we led the series a with us. But in later years, we've gifted, we've done a number of things in blockchain, a number of things in FinTech and AI machine learning.

One of the themes you hear throughout those, those enterprise B2B is probably 70, 80% of what we do and B to C, maybe 30%. But in recent years, we've been very focused on a theme. We call community as a competitive advantage, and it's a theme that came out of our work at code academy and Mongo DB, and other companies like chief based in New York, the network for female execs, where we saw these, the power of community.

In companies where you might not think community would matter. You know, Mongo DB is a database software company, but there were many other database software companies that were launching these novel, no SQL architectures, but Mongo DB had a better community. And that powerful community propagated the company, you know, code academy has this learning community and chief as this incredibly powerful executive community of, of women professionals.

And so. We've begun to really be inspired by and believe that entrepreneurs who are thoughtful about leveraging community as a competitive advantage will win. And then now's a great moment for that strategy. And that's led to a lot of exciting companies, uh, another New York company comScore, which is the Salesforce or CRM for community, um, is one of those companies.

So we've been really leaning into that theme in, in the recent years. 

MPD: [00:21:53] Are you hunting for companies that match that profile at some level or. If they come in and I'll also is equal. And it's you feel like it's a good company, plus that 

Jeff Bussgang: [00:22:02] it's a go. Yeah. I mean, you know how this business works. You, you articulate a strategy and you do go hunting proactively for that strategy.

That's the top-down, but there's always the bottoms up opportunistic lens. Ideally, they come together, we have a strategy, we meet an entrepreneur, they have that strategy as well. We're finishing each other's sentences and we get to yes, very quickly because we're. Aligned with regard to our view of where the world is going, but we're also open to really out of the box companies as well.

I, you know, we invested in a satellite company, um, called analytical space. That was a phenomenal entrepreneur who I met at Harvard business school. And. Had this vision for launching 

MPD: [00:22:42] there's no community in that ism? 

Jeff Bussgang: [00:22:43] Well, no, ish. There's a, it's a, it's actually a network of satellites and communications networks.

So maybe there's some community there cause all of the satellite companies, hardware, community, exactly. They, they form a Federation and create, you know, this incredible Cisco like network and space mesh, network and space. But. But no, we'll, we'll do things out of the box. We like out of the box as well. 

MPD: [00:23:06] Do you think you saw, this is an important topic for, would be VCs and entrepreneurs listening.

Do you think you source more of your deals by having a thesis? And I call it active sourcing, identifying where you're going to go hunt and finding the companies, or is it more that you kind of know what you're looking for? You know, when you see it and it's just a flood coming in through the front door.

Jeff Bussgang: [00:23:26] So, yeah, I mean the overlay to contextualize that question, we do have a set of criteria that are immutable, right. Have team quality of market, quality of business model. Many people have those. We were pretty rigid about those. So if we see the Matic opportunity, these that fit those themes, it's super easy.

If we see something opportunistic, That fits those themes. It's a rich conversation and it can be pretty controversial. And as you know, maybe from what Howard marks, the hedge fund investor likes to say, if you're going to be successful as an investor, you need to be not only write about the future, but non-consensus, it needs to be not just a correct vision for where the world's going to play out, but also one that not everybody else has.

And so we try to come up with these theses. But they're novel, but we also have to really be open to the out of the box, things that we just don't think about. And there may be non-consensus. And so I can't tell you the percentage of the portfolio, but I can tell you, we're always having that conversation, which is, is this, this opportunistic thing, does it fit enough of the criteria that even if it's not community-driven it's super compelling, uh, or is it just not good enough?

And if it's not good enough, we shouldn't pursue it. 

MPD: [00:24:49] And take this a different direction for a second. Not a lot of venture firms have made it 20 years. It's not to say there are a few, but it's a small percentage of the firms that have been started over time. There's a huge death rate for firms. They make it a funder too.

And then they're gone. You love to coach entrepreneurs. How could you coach VCs who are earlier in their fund cycle as entrepreneurs themselves are building a business? What are the things you learned maybe early on in flybridge that. Informed the path or made it work where others didn't succeed.

Jeff Bussgang: [00:25:24] And I, I feel like we're always learning ourselves. And I, it's funny to say this after 18, 19 years, but I still feel like we're new to the game. I take that sort of day, one mindset that Jeff Bezos talks about at Amazon very much to heart. And I know we do as a firm, we're often trying to reinvent ourselves and I feel like we've just gone through yet another reinvention with the addition of Ana.

And Jesse in recent years, but I think maybe that's the, you know, 0.1 would be, be willing to reinvent and don't hold on to an old strategy, be willing to be aggressive about having that day one mentality and taking advantage of the moment because we all have seen some amazing waves. You know, the waves of the nineties, the waves of the early two thousands, the crash in 2009, the current moment we're in.

And different strategies are required in different moments, in different cycles. And I think some firms maybe get a little bit too rigid and they say, look, you know, we're a hammer. Everything looks like a nail as opposed to being flexible. And yet you have to balance that with having a strategy and sticking to it, having a really strong team and letting that team run and.

That balancing act. It's really hard. It reminds me a little bit of some feedback when Jack Welch was at GE as the CEO and he was presenting to his executive team and one of his young managers said, Hey, Jack, do you want us to focus on the short term or the term? And he said, you idiot both. If it was just one or the other would be easy, I wouldn't need you guys.

So if you want to be really good at this business, you got to both be flexible. And adaptive to your strategy, but you also need to be disciplined and focused and have that sticktuitiveness to see things through. This is a, I mean, you know, this, this is a get rich, slow business. There's very slow, long cycle times investments I make today.

I won't know if they're any good for eight, 10 or 12 years in some many cases. And we're seeing the fruits of the seeds that we planted six, eight, 10 years ago. So it's a. It's a business that requires a lot of flexibility and adaptability. Jeff, 

MPD: [00:27:37] you seem very well-read when you're talking about quoting, uh, Jack Welch and everyone else, right.

There's you have a lot of anecdotes. Is that something you garnered from the teaching community being a professor, or do you, were you always voracious reader and even before getting involved with, with, uh, HBS. Were you looking for knowledge to those sources? And I'm asking this because I want, I'm always wanting to learn how people are learning.

Where are you finding, you know, wisdom and guidance? 

Jeff Bussgang: [00:28:10] I was a computer science, undergrad, and a bit of a technical geek as a kid, but I've always been a voracious reader and always reading history and biography politics, economics. So I'm a bit of an autodidact and. I don't know if there's any great secret to it other than just read really great material from really great writers and maybe discuss it with friends and test your thinking and test your assumptions.

Nowadays, my kids are my, my, uh, Socratic method is on my kids as much as on my students, because they're now learning machines and pushing me on, uh, and teaching me on very interesting things. So, yeah, I would just say, just being a, being a voracious leader reader and a lifelong learner. 

MPD: [00:28:57] Let's switch to Boston for a second.

You're a lifelong Boston player here. Right? Am I correct? That you grew up up in Boston. Yeah. Right. You're double, double Harvard started your firms in Boston, at least your recent cycles. And now you're, you know, you're teaching at Harvard business school. Um, when I think about, uh, Boston, my context, uh, on the geography, as it relates to the venture community started in 2006.

When I started in the game. And it was the dominant force on the east coast. I mean, I was in New York and New York had a chip on its shoulder to be more relevant compared to Boston. And I surmised at the time that Boston's dominance was a by-product of the density of universities. Right. Which that's obviously known for you have 30, 40 universities or something in a pretty small geography.

And New York has been scaling for 30 to four 30 to 40 years at this point. And I think has become the nexus on the east coast. I think that's safe to say, although I think that's being hopefully disseminated to the whole country. Um, I remember when all of there was a moment when all the Boston firms, yours included started to open offices in New York.

And so, uh, there was a shift, a big transition. And when I went back up to Boston a few years later, I noticed people in Boston had the same chip on their shoulder that the people in New York used to have. And I was flabbergasted just completely confused by that caught off guard. What is the mindset within the Boston ecosystem now?

How do people perceive people in Boston perceive Boston? Because you guys were the, uh, not the underdogs a long time ago. Uh, and you know, east coast standards were thriving. 

Jeff Bussgang: [00:30:41] Well first he had to pull back the camera and realize what a small town Boston is relative to New York population of just over 600,000 in the Metro area in the city itself.

It's really small, relative to tens of tens of millions in New York city. And as you know, great universities, fantastic history of venture capital venture capital was birthed here by general George Dorio and. Uh, the 1950s, when he invested in digital equipment corporation, the first venture capital investment ever, I believe Greylock was one of the first venture capital firms ever alongside a couple of firms on the west coast, uh, foreign to Boston.

So there's a really deep history of venture capital in Boston and where there's been an enormous amount of energy of surge of activity in the last 10 years. Since your story to pick that up is in biotech and health tech. And. At one point, it was a very open question. Where would the nexus of the world be in biotech and health tech?

Would it be San Diego? Would it be San Francisco? Would it be Switzerland? That answer is now definitively. Boston is ground zero, the top number one place for biotech and health tech. That's not my field. So I don't say that as a participant. I've just say that as an observer and, you know, objectively what I see.

And certainly the rise of Moderna has been a cherry on the top of that story in the wake of the pandemic, in the tech sector. We've done. Okay. We've done well, but you're right. Mark New York is surged. And when you look at the venture capital tables and investments and IPO's and exits Boston and New York are pretty much neck and neck now and often New York app's ahead.

So. It's been a funny dynamic because for such a small town, we've seen enormous growth to even stay neck and neck with New York. And tech is extraordinary given what a small town we are and then to have the biotech, the biotech layered on top, but there's a certain limit that we have in terms of a capacity, just because of the scale and size of the city.

And in some ways the scale and scope and ambition of, um, the ecosystem, you know, because in New York city, If you build a billion dollar company as an entrepreneur and you take away tens of millions of dollars, it's your neighbors, the hedge funds bonus that year. Like it's just, 

MPD: [00:33:07] it's just not that no New York is that wealthy, but yes, I'll take it.

It's a fair comment. There is tremendous wealth. I do take your point. Um, I think what I'm confused by is why there was an underdog mentality. And if you fill that, because if it's, you know, the, the level of yield you're talking about relative to the size is fantastic. 

Jeff Bussgang: [00:33:25] Yeah, I'll tell you why. I think it stems from babe Ruth and the trade to the Yankees.

And ever since then, man, Boston's always been the underdog

there. We, and then we had this underdog mentality with California for decades and decades. And I think that that's just part of the culture. We're just the, you know, the little city that punches above its weight, but we aspire to be the hub of the universe. Well, let's 

MPD: [00:33:53] talk about the biotech side for a second.

I mean, I feel like when we talk venture capital now the public mindset is around tech and that's no, one's in no small part because everyone's using the products that are being brought to life, uh, in our sector. Right. They're just very consumable. But when I look at, I wonder about long-term trends. I wonder if biotech isn't going to be.

Uh, a much more prominent part of the future. And it has been, what is your expectation for biotech as an industry? Um, given where we are kind of are on that curve of biotechs innovation. 

Jeff Bussgang: [00:34:28] Yeah. Look, it's not, as I said, it's not my field directly, but in many of my friends who I speak with are squarely in it is this two tech 

MPD: [00:34:35] guys talking about 

Jeff Bussgang: [00:34:36] biotech.

Right, right, right. So it's a little dangerous, but you know, I was talking to a friend of mine. Who's one of the largest, uh, Head of one of the Laura and founder, one of the largest biotech and health tech VCs about this topic just this morning. And the dynamic right now is fascinating because the intersection of compute power and cloud and big data and AI modeling with healthcare and genomics and proteomics and personalization, personalized medicine, that intersection is, is.

Blossoming right now. And I see it in Boston more than anywhere. And as a result, I think you're right. The rise of healthcare and biotech and med devices, you know, it's 20% of our GDP in the U S it's a massive industry. It's just being digitally transformed. All the things we did in the tech sector are just coming in.

Uh, you know, the, we used to talk about the enterprise, the consumerization of the enterprise. I think we're seeing the consumerization of the healthcare sector. Amazing. And so I think it's a really ripe area for, for disruption and for company building, 

MPD: [00:35:51] there was a moment in one of the Spider-Man movies, very important credible reference here, um, where they had a piece of technology and they could, I don't remember which one it was, but they could, uh, Create, uh, scenarios where they were changing the genomics of animals and the computer would just run the model and tell you what the output was.

I'm waiting for that to happen. I'm waiting for the biotech people to work with the it folks. And tell us when you take this pill, this is what happens to your specific body. Have you seen anything coming up around that 

Jeff Bussgang: [00:36:22] recently invested in a company out of Harvard's computational chemistry lab called robotics with a K, which is applying machine learning models to chemical compounds.

And to your point to materials, discovery, and eventually drug discovery. Because if you have all of the models in the machine, then why do you need an organic chemist to design a molecule? You can just ask the machine to design the molecule. And if you have a robotic lab, you can manufacture and test. So you have a very tight closed loop for the experimentations to allow the machine in the model to learn more rapidly.

Uh, I think it's a fascinating area and it's an area we're very excited about. Is 

MPD: [00:37:03] there something that Boston needs at this point, if you were speaking to the people listening who care about the community there, what should they do or build or focus on to make things go bigger, better, faster? Well, I 

Jeff Bussgang: [00:37:17] have an impact.

Yeah. I think, look, there's been an enormous amount of wealth created people have sort of. You know, maybe miss this, but in the last year, if you look from March to March and just five companies here in Boston, DraftKings, HubSpot, Moderna Thermo in Wayfair, there's been nearly $200 billion of market cap created and just those five companies.

So we're doing pretty well. Yeah, the thing we're not doing well on is, and many are not in many communities is in racial equity and diversity. And I think Boston has historically a bad reputation candidly, in that area. And it's a record  from the Boston busing crisis of the 19 seven and these two, uh, some of the, uh, racist behavior in the sporting.

Ownership circles with the red Sox and the Yankees and, and others. And that rep made it an uncomfortable place for many black professionals and professionals of color from a reputation standpoint and from a reality standpoint, and we own, we each need to live, you know, own that history. We need to face that history and, and then really think about how we create an environment where, and this is the vision that many of us are working on now where Boston is.

The best place to be an entrepreneur or an investor or an executive of color. 

MPD: [00:38:47] So let's, let's dive into what you are doing. So you, you, um, you're the co-founder of hack diversity. Uh, can we start off with an overview of specifically what that initiative is focused on? 

Jeff Bussgang: [00:38:58] Act diversity's a workforce development and training program that brings black and brown engineers out of our.

Universities typically are community colleges and urban four year universities and pipelines them into our top innovation companies. And it does so with these wraparound services to coach both the individuals, what we call the fellows and the companies to help train them on diversity, equity, and inclusion to make that match.

One of the things that I observed is that we had a market failure in. The match of supply and demand of labor. You know, I would go into these board meetings and the companies that I'm an investor in, and they would whine about the talent shortage and the lack of engineers. And then I would in my nonprofit and civic work, I'd be surrounded by these amazing institutions that are, uh, rising up and training black and brown engineers.

And there was no connectivity, no social connectivity, social capital and network connectivity. Now I'll give you one example that really brings this to life. Cause it's a stunning story. So we bring these, these individuals, these cohorts, we create a fellowship. We train go through this training program.

The companies go through a training program and then we match them into paid internships. And then they get full-time jobs after the paid internships, all in, in engineering and computers, software development. And, and there was this one, one fellow who we had a couple of years ago who said to me, and to our head of the program.

He said, you know, I applied to a job at company X three times, and I didn't even get a response. I went through this program and lo and behold company X is one of the companies in the program. And we went through the matching process. They pick that individual as their number one choice and hired him for a job that eventually.

Took his salary from minimum wage to a hundred thousand dollars a year in total compensation. That's awesome. So there's this weird market failure, and we're just trying to fill in a 

MPD: [00:41:08] connect there. Where, where does this actuaries is breaking because you're fixing something. What's the core disconnect.

Jeff Bussgang: [00:41:15] And again, I, I, I'm not a deep, deep expert in this. I can only tell you what I've observed and we've been doing this now for five years in the cohort. As in those five cohorts, we've had 300. Uh, members, fellows in that cohort, almost all of them have gotten jobs at these companies. And the disconnect is that the companies we know as the growth stage companies, the pre IPO companies, the recently IPO companies, they're very immature in their hiring and diversity practices because they're immature companies.

They don't have heads of talent that have been there for 10 years that have created practices, heads of diversity. They've created a recruiting programs and they're subscale. So they don't, they go to Harvard and MIT and Northeastern, but they don't go to bunker hill, community college or north Essex community college.

They can't afford to. So you have a fragmented supply of a fragmented demand of talent, and then you have layered in unconscious biases because they're looking for. People with the right degrees who have the right experiences who maybe even look the right way or at least follow a pattern that they recognize and can ascertain leads to success.

And on the flip side, you have the source of the talent. They've never heard of HubSpot. They've never heard of Vertex. They've heard of state street bank, and maybe they've heard of staples and fidelity. And so they go for those jobs. And they don't have the benefit of going into jobs where they're going to generate real wealth and be on a rocket ship from an experience and growth standpoint.

So that's the mismatch we're trying to correct. 

MPD: [00:42:59] That's great. Very helpful. Is there a lesson or two that you think is important for people listening, who run companies or who are thinking about applying to a company, um, that you guys are teaching in your program that you think you wish more people were aware of?

Jeff Bussgang: [00:43:16] Many people are beginning to realize the power of unconscious bias and Abraham Kendi, who by the way, now has come to Boston university from Washington DC to create this anti-racist center has this book how to be an anti-racist, where he talks about it's, you know, it's not enough to be not racist. Use a baseball analogy.

That's like hitting a bunch. But to be anti-racist to swing for the fences, you have to be intentional and strategic in your approach. And I think many institutions, even small mid-sized companies, particularly where you're so busy building the company, you don't slow down to think about culture and practice and you wake up and you have a hundred employees, all of whom are white because the first 10 are your college buddies and the next 30 or the people they know in their first degree network.

And then everybody comes to the company and says, well, this is what the company looks like. This is who fits. And so you get sort of culture fit, meaning something very poignant, as opposed to perhaps values fit, which is a more important criteria for hiring. So that's what I would say is the power of unconscious bias, values fit versus culture fit and being intentional very early on in the practice.

MPD: [00:44:33] Why, why did you decide to co-found this within the NVCA the national venture capital association? What's the connection there. And what was 

Jeff Bussgang: [00:44:42] the thinking? The, the organization we co-founded with is the slight difference, the new England venture capital association. So it was our regional VC. I got it. Yeah.

It's our regional VC association and a large reason for that is because our. President of that association who had just been hired a year before we started this program as a black woman named Jody rose, who came into that job, not thinking she was going to work on anything near this. She thought she was going to work on the venture capital work and networking and lobbying to, uh, pursue the policies that the VC industry cared about and helping connect the network.

And instead, um, she was inspired to do this with work with me, and I was inspired to do this work with her. And I think we felt like, and I think the VC community in Boston felt like this is a responsibility that we own, that we, as the current leaders in the community, one of, one of the senior VC's in Boston has this phrase, not on my watch.

Like I can't allow this to continue on my watch. Now that I'm, this individual was saying, you know, now that I'm a leader in the industry and in the sector, and this is a guy who's on the mightest list year after year. Uh, who, who like many feels frustrated that the system is broken and it feels like, you know, we own that system now and we got to fix it.

MPD: [00:46:06] What should other people be taking from this or people in other cities maybe who don't have this program? What's the, is this a unique Boston thing and obviously not racism, but this particular structural mismatch, or do you think this is kind of low hanging 

Jeff Bussgang: [00:46:20] fruit? I think this mismatch is pervasive. I haven't studied other cities at the same degree.

Although I, as you know, we do a lot in New York city and it appears to be there as well. And you would know this better than I, you know, it continues to be a pervasive issue, even though New York is even more diverse than Boston as a city. So I think it is exportable. And we, we hope to do that. Our ambition now that we've perfected the model and scaled the model this year, we've got over a hundred fellows in the cohort.

And 30 companies participating. We're we're at a quite reasonable scale for our ecosystem. We, we think in the coming years, it may make sense to export it to another city or two. And obviously I'd love to see local efforts. There was never in San Francisco called code two 40, that rhymes a bit with this, um, that I've had some interactions with.

I'm not deeply familiar with what they're doing, but I know they, they have a similar lens from what I understand you have 

thanks 

MPD: [00:47:16] for being on the show, but before I let you go, I want to know where all this goes. I mean, you are a workaholic. Who's accomplished a ton of stuff. You don't seem to be slowing down.

We were doing pushups for everyone listening before we started this, Jeff's in great shape. Where do you see yourself in 10 years? What's the plan. 

Jeff Bussgang: [00:47:35] I hope you'll invite me back on the show. 

MPD: [00:47:37] If I'm still doing it in 10 years. If anyone wants to listen to me, 

Jeff Bussgang: [00:47:41] that's how I feel, man. I hope people still want to listen to me.

MPD: [00:47:44] Um, No really? Where do you see your career going in the next 10 years? What are you 

Jeff Bussgang: [00:47:49] more of the same? I think so. I'm loving what I'm doing and I'm in my early fifties, I feel like I got a ton of energy and no reason to change. Okay. 

MPD: [00:47:59] Well, thank you for that. Uh, and thank you for being on today. 

Jeff Bussgang: [00:48:03] Thank you

MPD: [00:48:08] special. Thanks to Jeff for taking time to share his experience today. Once again, another round of fantastic VC advice. If you liked what you heard, please, what's up with a like, or a five-star review and feel free to share with a friend. You can find me on Twitter at MPD to hear more of my conversations with innovators, subscribe on YouTube, Facebook, or any major podcast platform.

Just search for innovation with Mark Peter Davis.