We don’t usually think of venture capitalists as the “creatives” in today’s economy—at best these stolid investors enable creatives by providing them with the financial backing and the management advice to make their ideas happen.
Think again! Foundation Capital partner Steve Vassallo is at the head of a new generation of Silicon Valley VC’s who did not descend from the heights of finance, but rose through the ranks of design. 99U met with Vassallo in his office at Foundation Capital in Menlo Park to learn about about his background, his motivation, and his future vision.
Steve, let’s beginning by figuring out who you are. You took a degree in mechanical engineering at Stanford, but now you are working as a venture capitalist. Can you connect the dots?
I have been a maker since before I can remember, whether it was building crazy Lego models or starting my own business (Steve’s Snowblowing Service—I still carry the card in my back pocket). At Stanford I was planning to get a Ph.D. in robotics and mechatronic systems, but I got sidetracked into a course in “Visual Thinking” where I learned about drawing and sketching, prototyping and need-finding, and creative problem-solving in small teams. That was the beginning of my discovering product design as a discipline.
I then spent five years at IDEO designing sunglasses for Nike, a bun toaster for McDonalds (I think I’m the only venture capitalist who has ever taken a course at McDonald’s Hamburger University), and anesthesia delivery devices. My last project at IDEO was Cisco’s VoIP system; I had to go head-to-head with Cisco engineers who made switches and routers that sit in closets and data centers and who didn’t know the first thing about consumer products, like a phone that might touch a person’s face 100 times a day. We had to educate them about the behaviors we saw in the field—at call centers, trading floors, cubicles—behaviors that if you just sat at your desk you could have never imagined.
But I was never crazy about the time-and-materials model of consulting, so I decided to apply to the Stanford Business School. I spent two years learning about “the business thing,” which I knew nothing about.
Eventually, I joined the team at Foundation Capital—first as an entrepreneur-in-residence, then as a partner—and I found it to be the most stimulating job on the planet. I meet maybe 20 new entrepreneurs a week, and I can’t help but be compelled by the mission they are on. They have thrown themselves into an idea and they’re just not gonna stop until their vision comes to pass. That’s a pretty amazing thing to be around all day.
In addition to its tech companies and its universities, Silicon Valley has the largest concentration of venture capital firms in the world. What is the particular focus of Foundation Capital? Where do you hope to take it?
It’s a question we ask ourselves all the time. I’d say that the main thing that distinguishes us is how we choose to spend our time. Instead of building market maps or dialing for dollars, we try to go really deep into a few areas, do foundational research, and then build very comprehensive points of view around these opportunity spaces. Along the way we conduct expert interviews, hold brainstorming sessions, cover whiteboards with potential projects and then “prototype” them in the form of highly informed points of view.
That sounds an awful lot like every design process I’ve ever seen.
Exactly! It’s the creative product development process I learned as a designer, but applied to markets and even whole industries. In essence, we’re using a design methodology to help us invest in areas we feel are ripe for disruption. There are a lot of venture capitalists here in Silicon Valley, but I’m not sure I’ve come across another firm that takes this approach.
Can you tell us about some of the areas you’re particularly interested in?
It changes every few years, but at present there are four: financial technologies; marketing technologies; machine learning and AI; and designer-founder.
“Designer-founder?” You’ve described to us the model of the designer-maker and now the designer-investor. What is a designer-founder?
You are a designer-founder if you have done three things: You have designed, built, and shipped things; you have done so with a human-centered, problem-solving mindset; and you have started a company to work on challenges that you have identified, as opposed to solving someone else’s problems.
Give us some examples. Are there really any “designer-founders” out there? Have any of their companies gotten off the ground?
Oh absolutely! In fact, it’s clear to me that we’re in the midst of a massive transition in the entrepreneurial ecosystem, one in which designers are moving from 11th hour stylists to ground-zero founders of 100-year companies. In fact, I would assert that we are entering the century of the designer-founder. We see this in Joe Gebbia at Airbnb; in Evan Sharp at Pinterest; in Charles Adler of Kickstarter; and we have invested in the Designer Fund, which itself has backed another 25 designer-founded companies. So yes, these designer-founders definitely exist, and we’re going to see a lot more of them. Armies of them.
You’ve just written a book, The Way to Design. What motivated you to put these ideas out into the world? I can’t help but think that there’s a personal story here.
The personal story was that I had to get back into design and to a community that had really changed my life. In many ways, this project was about reconnecting with my tribe.
At the same time, as I met more and more aspiring designer founders, I could see that many of them were unprepared for the journey that lay before them. And as I looked at what the venture industry was doing to support them, I felt that it was not honoring this community and what it so special about it.
No one gave me the guidebook when I set out to found a company. I have learned a lot, and I felt I had an obligation to share what I had learned.
So you wrote the guidebook that nobody had written for you.
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