This week on the podcast: Chris Lyons (a16z) and Chang Xu (Basis Set)
Each of these episodes touches on what could be considered the heart and soul of our organization. Everything we do at Kauffman Fellows focuses on developing tools to increase levels of self-awareness and enhance the ability to build authentic, meaningful relationships. In both conversations, Jeff drills down to these core themes and discusses the real, authentic journeys that each Chris and Chang have gone through to become the best version of themselves, in order to best serve the entrepreneurs they invest in.
Beyond the balance sheet, the deals won, and the exits achieved — it’s both Chris and Chang’s commitment to self-growth and investment in entrepreneurs (beyond merely providing capital) that is especially noteworthy. Catch each episode below or on iTunes, Spotify, and Anchor.fm.
This season of the Kauffman Fellows Podcast is produced in partnership with Mighty Capital. Together, we unravel what truly makes a great VC investor.
Personal Brand: Chris Lyons, a16z General Partner, on Being Entrepreneur-First
You will typically have over 1,000 interactions in any given year. Three of those interactions will change your life, but you have no idea which three. So, how will you show up to each interaction you have?
Jeff Harbach sat down with a Kauffman Fellow who is extremely well known for his personal brand as a mentor and role model in VC, Chris Lyons (KF Class 19), a16z General Partner, who leads the firm’s Cultural Leadership Fund (CLF). Chris discusses his impact at the firm, which is rooted in creating win-win opportunities across the cultural influencer and startup ecosystem, while also bringing more Black talent, executives, and professionals into technology.
The story of how the CLF started is a shining example of how hard work and great ideas can put you in the right place. Chris shares, “The original idea to start the Cultural Leadership Fund (CLF) was the Big Idea Project at Kauffman Fellows. I had to develop this giant thesis of what I was going to do at the end of my two-year Kauffman Fellowship. It was right around the same time I worked at the firm as Chief of Staff to Ben Horowitz.
We started seeing more and more people from outside of Silicon Valley starting to come into our offices, learning about the future and figuring out how we can help get them into investment opportunities and partnerships. Then, it became a competitive advantage for us for where we were behind the scenes winning deals.
If you think about consumer culture, it always starts with Black culture. Black culture has been at the center of sports, music, entertainment, fashion, film, arts, and I can go through so many different people that have helped paved the way for that. When you go into the technology industry, consumer culture is probably 10 to 15 years old.
The next generation of tech will be influenced by culture. We can do that within a16z and work with some of the best new technology companies, thinking through how we can connect the dots between the two.
Launched in 2018, the $18 million CLF Fund I was Silicon Valley’s first venture capital fund consisting of 100% African American Limited Partners (LPs). More recently, CLF raised a second fund and today CLF brings a limited partner network of African American check writers into 100% of Andreessen Horowitz venture deals while continuing to donate all of its fees and carry to causes advancing more African Americans into technology.”
On where investors can make the most significant impact on humanity
Chris is passionate about spreading the word about new technologies and empowering and enabling more African Americans to get into tech.
Software is the giant equalizer. If you knew about Bitcoin, Etherium, or all these other tokens, back in the day, you’d be in an entirely different position. The thing that can change the wealth gap is access to information.
He continues, “The more ways that we can create access to information so that everybody can be on the same page in terms of knowing what opportunities are available, whether or not you act on them is one thing, but the access to the information is super important.”
On his personal brand and being entrepreneur-first
At Kauffman Fellows, we define Personal Brand as the “Promise of the Experience” when interacting with you as an investor. When evaluating your personal brand, consider questions like: How do you treat people? What are you known for? What can founders learn from you? Chris is well-known in the industry as being a role model and mentor — and when asked about his personal brand, we think his answer perfectly sums it up:
The number one question from a venture capitalist is, “How I can help?” But a much deeper layer is, “How can I serve?”
Venture capital is the ultimate service industry. Remove all the financial situations, or what’s in it for me, and take the opportunity that you’re in as an opportunity to serve.
“Just by how the world works, things will come back to you in ways that you don’t even realize. So, it’s always good to put your head down, do the work, figure out how you can help make the world a better place by putting people together, creating new things, reaching out, and being a servant.
A brand is not necessarily what you think you are, but what people say about you when you’re not in the room. If you keep that in energy, as opposed to a brand, that energy will follow you and follow around others.”
Radical Self-Belief: Chang Xu, Basis Set Partner, On Investing with Conviction (Not Consensus)
The best investors have a willingness to bet on themselves. They invest because of conviction, not because they are following the herd or investing from a fear of missing out. Jeff Harbach sat down with Chang Xu (KF Class 23) to discuss how she developed radical self-belief and discovered her “Zone of Genius” as an investor.
Chang is a Partner at Basis Set Ventures, a $165 million fund that focuses on AI and automation — technology that transforms the way people work. Basis Set Ventures focuses on four pieces: infrastructure, collaboration, automation, and autonomy. As she and Jeff discuss in the episode, radical self-belief demands the cultivation of a voracious desire to learn and become an expert in your industry. Chang discusses how she tunes her perception to conviction in making new investments — not merely writing a check because of a good idea on someone else’s blog or co-investing with other top-tier VC firms.
On evolving as an investor
Chang admits that radical self-belief and the confidence that the right opportunities will appear didn’t always come naturally to her, “I used to very much be a planner. I would plan what I want to be in x years and, therefore, what are the skill sets and experience I need to have for that. Over the course of my career, I have thrown that out the window.”
Instead, with experience, she developed the confidence to trust her intuition and has been rewarded immensely, “Now, my planning is very evolutionary. Every day I just think, what is the most interesting thing I could be doing right now? Who are the best people I should be working with right now? That, over time, has delivered a lot more surprises and upside than I believed possible.”
On finding and following your calling in life
A major component of radical self-belief includes following what feels best for you, even if it isn’t always the easiest option. Chang uses a principle from a childhood game to help her make decisions. “I operate under the principle of warmer, warmer, colder, colder, which is a childhood game.
Every decision about whether I want to choose Project X or Project Y is always about if I feel like I’m alive when I’m doing this.
She continues, “Do I feel that like I’m thriving when I’m doing this? Do I feel like this is something where it comes to me very easily? I get happier and happier, and I’m more in a state of flow.”
On her Zone of Genius
Chang holds both MBA and AB in Applied Math and Computer Science from Harvard and started learning computer programing at age 12, but she doesn’t just rely on her past education. Her natural talents and hard-earned education helped her to recognize her Zone of Genius: “My Zone of Genius is very much to go deep versus to go broad. I’m not a generalist investor. I very much like to focus. My focus area is anything very technical around infrastructure and developer tools.
I’m very thesis-driven, and I like having a close-knit network and community. I value quality over quantity.
My Zone of Genius is around how I’m able to ingest lots of new information rapidly and then organize it into my mental model. This works in the day-to-day because I’m investing at the seed stage. We’re all about trying to see new markets as they’re emerging. With the data around these new markets, there’s no consensus. By definition, there’s no consensus because if there’s consensus, it’s likely a much later stage than what I cover.”