Welcome to VC Unfiltered.

We're incredibly excited to have you here.

My name is Lucas Poles.

I'm the managing partner of Pegasus Angel Accelerator here in Los Angeles.

VC Unfiltered is a continuation of our previous series, Startup ..

And really our goal with this is to be able to

poke and prod a little deeper into the venture community and the different videos

most likely you've already viewed.

I know that you're tired of the canned responses that you hear from investors,

and I'm tired of asking about them.

So with our first guest,

we're incredibly excited to bring on Ilya,

a Stanford professor who just wrote a great new book called The Venture Mindset.

For anyone that's not in venture or not in innovation,

it's definitely worth a read really broadens the horizon it was a great reminder

for for us and even encouraged uh a couple new thoughts uh into our specific

process for pegasus and protect coast angels so with that ilia welcome to the show

lucas it's great to be here no i really appreciate it very exciting on your new

book coming out uh in t-minus uh uh probably a week at this point um very exciting

so so tell us about the new book uh venture mindset

Thank you, Lukas.

So first of all, I've been at Stanford for about years, and I founded Venture Capital Initiative.

And I developed a venture capital class that more than , students took,

and many of them became founders of venture-backed companies or venture capitalists themselves.

And it became one of the most popular classes at the GSB at Stanford.

In fact, last year, we had more than students on the wait list.

who wanted to, but could not take the class.

And so the idea behind this book, first of all, is to increase impact just beyond my students.

The second idea is that I spent years studying how people make decisions,

specifically how venture capitalists make decisions.

What I realized,

and I think this is one of the major insights,

is that smart VCs make decisions very differently.

Not because they're really different from us, but because their environment is very different.

And I discovered this venture mindset principles.

And the second idea of writing a book is really the realization that this venture

mindset principles are useful not just for founders,

for investors,

but also for people who work in,

for example,

large corporations,

in nonprofits,

in government organizations,

that they can successfully,

efficiently use venture mindset principles as well.

So my hope is to launch

with this book, The Venture Mindset Movement.

Very, very cool.

And a great breadth of participation throughout the time that you've been at

Stanford and the data that you've been able to accumulate.

So very exciting on that standpoint.

I know that when we look at the book,

I think you laid out nine different principles as they kind of go through.

But one of our favorite ones,

and this is definitely prevalent within the venture community,

is that,

and as you put it,

home runs matter and strikeouts don't.

So let's talk a little bit about kind of your view around power law and some of the

insights that you derived from writing the book.

Right, Lukas.

So first of all, let me step back and tell you what this means.

This is the very first principle in the book, home runs matter, strikeouts don't.

Let's start with the simple statistics.

If you look at early stage deals,

and I have at Stanford the data set that covers all of those early stage venture

pack deals,

then the reality is that most of those investments are not going to be successful.

In fact, you can have out of, let's say, typical deals, are going to be failures.

And then several will provide you two, three, four X, kind of okay, but not great.

And then there's going to be only one out of statistically, that is a home run.

And home run might provide you X.

maybe even more for each dollar that you invested in.

And the whole business model of the early stage venture capital industry is trying

to maximize the chance of hitting a home run.

And first, VCs, I think, as a result of this, making decisions very differently.

And second is that if you think about large corporations, then very often,

way they make decisions in fact reduces the chances of them hitting a home run okay

let's start with vcs and in fact let's start with maybe even founders um when i

meet and i advise so many of my students who become founders one of the very first

applications of this specific principle i say look

that very much depends on the size of the fund.

Because if you manage a $ million fund or you manage a $ billion fund,

home runs means different things.

As a result of that,

Lucas,

what I'm most amazed about,

you know how often founders don't know the size of the VC fund?

They might talk to you, Lucas, and actually they don't know.

You manage a small fund, you manage a large fund.

They kind of heard about it.

I think this is really critical.

Or also to find out where you are in your journey.

Are you at the beginning of the investment period?

Are you at the end of the investment period?

Because again,

venture capitalists will make changes based on what they already observe in the

existing portfolio companies.

If we think about corporate executives, then it's really about accepting failure.

I think this is very, very tough for corporate executives

executives,

even for corporate VCs,

to either accept or convince their colleagues that,

you know what,

in order to catch a home run,

you in fact have to accept.

Sometimes you have to strive to increase the probability of failures.

Let me tell you a story.

I advise a lot of, you know, large leaders of large companies.

So I led a session to part of a very large company, the CEO, the C-suite, the board,

And I was talking about this principle in great detail,

providing examples,

and specifically about the strikeouts or the failure rate.

And the CEO was very impressed.

He turned around and asked his chief innovation officer, so in our incubator,

How many strikeouts do we have?

And there came a very proud response.

Oh, we have no.

We have no strikeouts.

We have no failures.

So my response to that was,

well,

if you don't have strikeouts,

that means that you also don't take enough opportunities to hit a home run.

And I think that is a challenge because many large corporations love the word innovation.

But they live in the world of incremental step-by-step marginal innovation.

But disruptive innovation that VCs really deal with often, it's very, very different.

Now, VCs.

You know,

this is really interesting because one of the unexpected surprising by writing this

book is that I now talk a lot with venture capitalists.

who reach out and say,

oh,

Ilya,

this is really interesting because we've heard or read about those venture minds principles.

And you know what?

We realize that we follow this, this, and that.

But in fact, we can improve along this and those dimensions.

And this principle one about home runs and strikeouts is one of those.

Recently, I consulted with one very large venture capital firm.

I looked at the data, the records, etc.

One of my very first reactions was, I said, guys, you know what?

You look more like a buyout firm than an early stage VC firm.

But in your prospectus, you say you are an early stage venture capital firm.

But if you look at your success rate,

Okay, but if you look at your strikeout rate, it really looks like a buyout from to me.

So let's talk about this.

That was, to me, it was simple application of this principle to them.

It was a revelation.

Yeah.

No, it's super, it's very, very interesting.

And I know that going through the book myself,

there were a couple of principles that I was excited about and things that even we

can improve in our process,

even when looking at either the angel group for Techco's angels or for the

accelerator itself.

And we'll get into some of that stuff after,

but I wanted to touch on a little bit more around the corporate aspect that you had

kind of mentioned.

Corporates are,

you said that there might be an inability of them to be able to kind of make these

steps that they love innovation,

right?

But they're not necessarily, maybe they can't actually implement it.

How do these corporates actually adapt?

Like what are those steps that they might be able to take to be able to actually

implement real innovation rather than what we're currently seeing?

You know,

Lucas,

what is really interesting and important to observe about the venture mindset

principles is that some of them are very easily implementable in a large corporation.

I will give you some examples right now.

Some of them are more difficult,

and the truth is that some of them could be implemented only if the CEO decides to implement,

okay?

In some cases, the entire design

all the large corporation works against.

And I think that if you look at some examples of venture-minded organizations, they're built by design.

Let me give you a couple of examples, okay?

And then I'll go to practical applications.

So a couple of examples of venture-minded organizations.

First, Amazon.

If you think about Amazon and a lot of things that Jeff Bezos, the founder, the former CEO was saying,

Like,

for example,

the size of failed experiments,

he liked saying,

should increase with the scale of the company.

But he also implemented that.

Like, you know, Amazon was betting on a lot of disruptive things that had nothing to do with the core.

And some of them were successful, like AWS, which was a bet.

And some of them were dramatic failures, like Firefall.

It was a dramatic failure.

Do you know what happened though?

Like if you're in a large corporation and you're in charge,

Lucas,

like you're an executive vice president in charge of this fire phone business and well,

it loses,

okay?

You just write it off.

What do you think is going to happen to you in a large corporation?

Well, you know that the EVP in charge of this in Amazon was not just not punished, fired, whatever.

He actually was, I think, promoted.

And then later he became actually very important in making Amazon successful in other disruptive stuff.

Another example is Netflix.

where again, going back to principle number one, home runs, meta strikeouts don't.

Reed Hastings, the founder and CEO of Netflix says, we should have a high enough cancel rate.

That's how he calls this.

There's no surprise that Netflix became more valuable than most of the Hollywood studios combined.

Because if you look at the distribution of Netflix success and failures,

it's actually very similar to a successful venture capital firm.

Isn't it amazing?

Okay.

Now, a couple of things that you can implement right away.

One of the principles that I think talking to large corporations,

they find really interesting is the principle that I call agree to disagree.

What this means?

You know,

not just in large corporations,

but I think in our human interaction,

we like to live by consensus and by conformity.

Like when you and I,

you know,

have like a beer together,

okay,

a glass of wine,

and you tell me something,

it's actually not very easy to contradict,

unless you're my very close friend.

Yeah.

And especially in a more formal group decision,

let's say a group of like people meeting together to make a decision.

Typically groups work by consensus.

So all of us need to kind of feel comfortable about this,

you know,

that works great in incremental innovation.

it's disaster when it comes to disruptive innovation,

trying to catch an outlier,

a home run,

because home runs almost by definition is something that doesn't happen every day.

And so at least some of us will think it's stupid.

Let me give you an idea.

Let me give an example of this in the VC world.

So one day,

Reid Hoffman,

who was a then partner at Greylock,

venture capital firm in Silicon Valley,

came back to his partners and said,

guys,

you know what?

I found this very interesting startup.

I'm actually interested in investing.

It's a startup where you can invite strangers to sleep on the sofa in your living

room and they will pay for it.

And everybody around the table thought, are you crazy?

Like, you must be absolutely mad.

And Reid said, no, I actually think that, of course, they discussed business model, blah, blah, blah.

And then I believe it was David Shea,

his partner,

who said,

you know what,

Reid,

every single VC can have a deal on which they fail.

Let Airbnb be that deal of yours.

Now, and then, of course, Greylock invested.

So here's an interesting point, Lucas.

And I would like those of us

who read,

who view this,

whatever,

who work in a large corporation,

have they experienced large corporations,

think about this.

Whether in their organization, they would have been able to proceed.

Because in most organizations, if there's at least one,

executives against that very often means the end of the story.

So even though Greylock partners thought that was stupid,

they allowed one of their partners who was a champion of the idea to proceed.

And I find that in the most successful VCs with a lot of partners,

they have this agree to disagree principle.

And they use different methods for this.

where effectively they don't need to reach a unanimity,

a consensus,

to proceed with an investment,

at least with the first check.

This is exactly the opposite of corporate VCs.

I've started a lot of corporate VCs.

We actually went in with my team and looked at the detail,

the design of more than corporate VC units.

And most of them, frankly, are not very efficient.

Why?

One of the reasons is they are characterized by this unanimity.

Let me give you kind of an example.

I won't be able to name you the firm, but I think that many of you have this experience as well.

So the head of one of the CVCs said,

one of the difficulties I have is that we have this IC,

investment committee.

Now, IC consists of chief finance officer,

chief technology officer, the president of this business unit, the president of that business unit.

And so I need everybody to agree.

Everybody has to sign up.

Okay, he said.

And you know what he said?

He told me, I get this unanimous support every single time.

Now, how do I do this?

So I never had anybody say anything.

I pre-socialize the deals.

So I come to Lucas and say, well, Lucas, here's the deal.

Do you like it?

And Lucas says, stupid.

I will not bring this deal to the table.

Okay.

What this really means, of course, is that the head of this CVC doesn't bring it.

a single interesting deal to the table.

How do we know?

I asked the CVC head, can you look at your anti-portfolio?

Which means the companies that you had a chance to invest in, but you decided not to.

And they did.

And it turns out that their anti-portfolio performed much better than their portfolio.

By the way, Lucas, this is something that I recommend everybody.

Whether you're a founder, a VC.

If you're a VC, you absolutely must do it, by the way.

Angel investor.

Very important for angel investors.

I worked with an angel accelerator, but also large company.

This word, anti-portfolio, is very useful.

Let me give an example.

I recently worked with a very large successful venture capital firm.

And let's put it this way.

They used to be more successful than they are now, I think.

Or at least that was the perception of themselves.

and they asked me to come in and kind of help and then we looked at anti-portfolio

in fact the very first question i asked them so so do you have the data they had

the data so we looked at the entire portfolio and uh it turns out that uh we looked

at unicorns so they invested in some unicorns and they actually had more unicorns

missed

Then,

and this is really interesting,

Lucas,

then I said,

okay,

now,

and that was really my contribution to their thinking,

let's construct the deal funnel and let's see at which point you missed those unicorns.

It turns out that they had an opportunity to see all of them.

They had access to every single unicorn.

And all those companies were reviewed, but all those companies were missed at the partner meeting stage.

And the reason was French Capital was very successful.

They grew from like several partners to many partners,

but they did not change their decision-making process.

They still require this unanimous kind of support.

And I think that was one of the issues.

So let's bring that back to the funnel.

So when we talk about it,

so when we're starting,

because the majority of either VC firms or accelerators,

right,

we all have a specific funnel where we start with a very large amount and then kind

of dial it in.

When you're talking about the partner meeting,

are you talking about,

call it two or three stages in where they've kind of gone through that initial one

where we've looked at it?

It's like, hey, there are a bunch of red flags.

We're not even going to proceed with this.

And then maybe in the second or third one before we're getting into real argument.

So is it after that kind of red flag stage or where specifically do you place kind

of that partner meeting in the funnel that you're talking about?

That is a very good question, Lucas.

In that case, it was not at the red flag stage.

Because what's really interesting is that there were individual partners who

actually did the due diligence on that startup.

They definitely passed the red flag stages in terms of the market size,

the value proposition,

the business model,

and the founding team.

But in every single case, because it was early stage deals, there were some weaknesses there.

It's actually very easy to criticize those.

And I think in every single case, or in almost every single case, it was a new opportunity.

So in every single case, the market was potentially huge, but still did not really exist.

Or they had an existing player.

For Zoom, you would have Webex or whatever, BlueJeans, or Google Hangout back in .

And so it was very easy to say no.

And I think that it was the partner meeting stage where you have a champion who is

trying to prove to anybody it's great,

and then everybody,

or maybe not everybody,

but majority of people will say,

Or at least some partners will say, you know what?

I think we should not.

This is too risky.

We should not do this.

Yeah.

And again, in a Greylock, a champion would have proceeded, at least in some cases, right?

And I observed this, by the way, in many VC partnerships.

Like another example I have is Venrock.

You know, in Venrock,

Very funny.

I talked to managing partner,

Brian Roberts,

and he kind of smiled when he recalled when they had this LP meeting.

And they, of course, have, I presume, a lot of pension funds, endowments.

And of course, there are new people come to these meetings.

And the new people typically ask the question, so how does your investment committee work?

And he loves this question because,

of course,

his reply is,

he's looking them into the face again that says,

well,

we don't have an investment committee.

And like many LPs, I guess at this point, like what?

So the whole point is that they do have partner meetings.

They do have investment memos.

They do have due diligence.

And then they debate vigorously.

And by the way, there are methods how they would do so.

But then every single partner who is championing the deal exits the room and has to

make their individual decisions.

Okay, interesting.

So that is,

again,

I would not recommend this for every single venture capital firm or for corporate

venture capital firm.

But I think if you're all around the consensus or unanimity,

likely,

not likely,

I know,

but you will miss big deals.

Yeah, it's absolutely the case.

The very interesting point, the anti-portfolio.

So when we talk about,

because you just mentioned what we were talking about within the actual partner meeting,

they have a vigorous debate,

right?

So walk me through a little bit more of what that kind of looks like,

because if you're not looking for consensus,

how does that meeting actually operate?

Yeah,

that's a very good question because this is what I find,

you know,

works relatively easily or applied very easily,

even in large corporations.

And definitely,

if you look within your venture capital firm and your,

even angel meetings,

you actually have to design.

So the first thing you have to realize, you have to design.

If you don't design it, it will not happen by itself, okay?

So here, let me start with very simple things.

And then proceed to maybe also easy to implement, but more subtle things.

First,

in any single group meeting,

when you have to make a decision or reporting information,

first,

make sure that junior people speak first.

Like if you're in a venture capital firm meeting,

make sure that your analysts,

associates,

interns who worked on the deal speak first.

Okay, is to implement, but you know what, amazingly enough, not so many organizations implement it.

Second, insist on anonymous pre-meeting feedback.

So here's the, for a corporate VC, for a VC, but really also for any investment project.

In fact, it also applied to hiring decisions, for example.

Request the memo in advance.

Everybody should read the memo in advance.

And then everybody should submit questions and feedback or any additional information in advance.

There are so many apps these days who allow you to do this.

And also anonymously.

So in advance or anonymously so that,

you know,

when I submit this and you see,

you don't see,

you don't know whether it's coming from the head of the firm or from a junior

associate who just recently joined the firm,

okay?

This also, by the way, creates the culture of trust so that actually we care about what people think.

Because if you don't care what this person anonymous will provide,

the question should be,

well,

do we really need this person on our team?

Okay.

Another one, which is, I think,

Also,

relatively straightforward,

and I think the best VC firms do this,

and by the way,

the best corporations as well,

but it's a little bit more difficult to implement,

so you have to be careful in implementing this.

I call this devil's advocate mechanism,

which is,

let's say,

in a venture capital firm,

let's say we have seven or eight partners,

and one of them,

one of us is always a champion of the deal.

So we point one partner

to be a devil's advocate.

So that partner actually is in charge to identify external weak spots.

Raising questions, maybe awkward questions that other partners find difficult identifying.

Or they identify but maybe find it difficult to raise those questions.

And I observed in large companies, Lukas, that devil's advocate work amazingly.

Because you, in fact, force disagreement.

Okay.

So if we, let's say, discuss a project and Lucas, you are officially today's devil's advocate.

That is your responsibility to say why we should not invest or why we should not hire this person.

Okay.

Why we should not allocate budget to this project.

The subtlety here is that this should be designed

And you should alternate who is devil.

Because Lucas,

if you're going to be devil every single day for the next five years,

okay,

that will not be very,

very effective.

Okay.

Let me give you another example of I think that is initially I found this very

counterintuitive myself,

which is I think that whenever you are in the venture capital setting,

or if you're in a group decision making where

you discuss a disruptive idea, potentially disruptive idea, experts should speak last.

This is kind of interesting because typically we'll say experts should speak first,

like Ilya is an expert on venture capital,

so let Ilya speak,

okay?

And whenever we deal in incremental situation,

that's great because our point is to make an optimal decision in the least amount

of time,

and we don't expect big changes.

But whenever,

like in the situation with Airbnb,

where strangers can live on the sofa in the living room,

the market doesn't exist yet.

And if it's created, it's going to be disruptive.

So there are a lot of unknown unknowns.

As a result of that, who is an expert?

And experts or pseudo-experts could be in their golden cage looking at the past.

So in fact,

I observed even in some firms where biotech and IT people make decisions together,

on IT deals,

biotech people ask questions first.

Because if an IT person who is famous is going to immediately say something,

then of course biotech person will say,

well,

this doesn't sound right,

but maybe I should not be speaking because obviously I don't know about this space.

So now stepping back,

you know,

and in the book we give so many other specific mechanisms,

but stepping back,

those are,

I would say,

relatively easy to implement,

relatively straightforward.

And you will see if you do so,

how this will dramatically improve your group decision making very,

very quickly.

I observed this in the VC firms, in PE firms,

In angel groups, I observe this in large corporations as well.

So walk me through that a little bit between the angel groups,

because for the majority of these principles,

%,

right?

We can absolutely implement it.

The providing feedback in advance before getting groupthink, I think, is...

spectacular so and it's anonymous so that no one has it right but i feel like in in

corporates and in angel groups and angel groups when i was reading the book it

really resonated with me that that angel groups very much operate like a

corporation and that we have stakeholders right there we're all looking for the

same things if we want to get something passed it has to be uh unanimous and you

have to go there's a lot of politics involved right

And so the devil's advocate piece, I think,

What tends to end up happening within angel groups is that you sit there and you're like,

well,

I don't want to give up this social capital to go against the deal that someone

else is bringing,

even though I don't feel like it's right.

So what specific implementation methods around that have you seen that has gone well?

Is it more around like,

hey,

we're going to assign a specific person each time,

even though they might agree with it,

and that's the way to kind of get around it?

Or what mechanisms have you seen specifically there?

So I think social capital, Lucas, is exactly the right word.

Because if I'm an angel in an angel group, I have my social capital, my reputation.

I don't want to come across as a difficult person, right?

Like,

I might ask a probing question,

but I don't want to say,

Lucas,

you brought like a really stupid deal.

I mean, why would I want to say this, even if I think so, right?

Yeah.

So the way to approach this, again, is to appoint somebody.

Like,

if I'm appointed to criticize your deal,

Lucas,

and again,

yeah,

those criticisms should be constructive.

Just to say stupid, this is like not very constructive.

Okay,

but I will say,

you know what,

I will say,

and then I will say,

well,

let's look at the founding team.

And to succeed in this space, the founding team should have this experience.

And actually, I didn't say this.

And the business model of the end economics will not work because blah, blah.

I think that appointing devs that are good in the angel group is equally or even

more important than in the venture capital groups,

I think.

Yeah.

Now,

I believe that there is one difference between,

and by the way,

sorry,

and you have to alternate,

of course.

You have to alternate.

And in fact, you have to delegate this authority to somebody to appoint those advocates.

I think there's one difference is that in angel groups at the end of the day,

unlike in venture firms,

angel,

they even may vote,

but at the end of the day,

they vote with their own money.

They don't really have LPs, right?

Well,

what's interesting is that the angel groups have moreover moved to – and the

majority of angel groups have moved this way into having their own funds and

pooling capital together so that they can write larger checks and try to compete in

that kind of same space.

So it's a yes and no, and it's kind of a learning lesson of –

the new model and how to actually implement it appropriately with this kind of design.

So I would say that if angel groups formed SPVs or forms funds,

where at the end of the day,

you yourself not decide on individual deal,

but effectively just give money,

then it becomes like a venture firm,

where the difference is that it's not your full-time job.

And I think you care more about social capital, maybe.

And then all this methods that I, all this methods that I,

showcase for you, I think is very, very applicable.

In those cases,

and I worked with many angel groups where at the end of the day,

they decide to invest,

they will form an SPV,

but at the end of the day,

for every single deal,

you have your own LLC.

You still have to vote individually.

I think the challenge there is that I really like the deal.

I know that

to invest in this deal on behalf of the angel group i need to convince at least

like whatever seven eight nine ten people to put in ten fifteen twenty thousand

dollars and therefore i observed that um deal leads are very often more emotionally

committed to this there's like escalation of commitment yeah okay and as a result

and others i think more careful about their social capital so again putting all of

this um

all of these mechanisms in place for angel groups is very helpful.

I definitely would recommend something that VCs just practice,

and angel groups very often don't practice,

is providing feedback in advance.

I've seen too many angel groups where they go on the Zoom chat or for the dinner meeting,

they actually don't even know who is going to present today.

There will be like maybe six pitches.

I think having this in advance

one page summary plus pluses and minuses would be very helpful.

Yeah, no, I agree.

That would be the,

yeah,

I'm trying to say,

then you start running into the passiveness of % of the angels within the actual group.

But I think you could implement it in the beginning of like,

hey,

write down a couple of pros and cons that you're saying and be able to send this in

beforehand as those kind of,

yeah,

those potential red flags that we're running through.

Let's jump back and kind of finish this out with a little bit more implementation around the corporate.

So we touched on it a little bit before.

I wanted to talk a little bit more.

We touched on with corporates, the kind of intolerance of failure, right?

The playing it too safe.

So as they kind of progress,

So another large point that you made,

I think that this is very applicable to a lot of,

honestly,

to early stage investors as well,

whether it be angel groups or incubators or accelerators is kind of that sourcing capability.

So walk us through,

and it's very specific towards corporates because they don't have necessarily

associates or other people out in the field,

right?

How would they go around implementing something like this?

Yeah,

and is it better for them to potentially just outsource the entire thing and just

be funding another venture firm outside of them so they don't have to deal with the chaos?

Or what does that kind of look like for what you've seen?

Yeah, that's a great question, Lucas.

First of all, this is the principle I call getting outside of four walls.

And to start with something maybe that is obvious but still useful to confirm by research,

When you look at the networks of venture capitalists,

they're much larger and more diverse than the networks of corporate innovators,

let's say corporate venture capitalists.

So I compare the LinkedIn connections,

let's say,

of VCs and their corporate peers,

and the connections are larger,

but also much more diverse.

different backgrounds, different industries, different firms, different universities.

In fact, it's interesting that one of the piece of advice I have, just go and check your LinkedIn.

And if it turns out that your LinkedIn is mostly your peers in the workplace,

or those whom you went with coach together,

try to think about how you might meaningfully diversify your network.

Because most interesting ideas these days come from unusual people outside your direct network.

And maybe those who don't have expertise exactly in what you do.

Now,

in terms of corporates,

I find that for them,

it's sometimes very difficult to source deals effectively.

And by the way,

that's unfortunate because in many ways,

I think corporates are much more in demand now in the startup world than

traditional VCs.

Like in the past, you actually do not need corporates because startups were small, scrappy.

They didn't reach the scale very quickly.

These days, very often successful startups would like to scale up and go global right away.

As a result of that,

they need those corporates who can provide help,

distributions,

support and so on,

access to their chains,

their supply chains very quickly.

And I think many corporates just don't use this opportunity.

So how to do it?

How to get outside of four walls?

couple of piece of advice.

One, I looked at the structure of corporate VC teams.

And I found out that the most successful those who corporate VC consists of both

people who worked in the mothership and those

who were professional venture capitalists or founders who did not come from,

come kind of broadly from the vertical,

but didn't work in the market.

So make sure that you have some people who are outside on your full-time, become your full-time employee.

Another, you mentioned it's difficult to source deals.

Well, many large corporates source deals by having full-time scouts.

Like Procter & Gamble,

for example,

you know,

they have,

Procter & Gamble has full-time scouts in various business lines and effectively

their job around the world is to find smaller companies

that are potentially interesting to Procter & Gamble.

Maybe to acquire, maybe to invest in, maybe to get into commercial relationships.

But the whole point is go outside your four walls.

So think about Scales.

It's maybe not very cheap, so you have to afford it, but I think it's worth it.

And then,

especially for corporations outside Silicon Valley or outside those critical mass

centers of innovation,

my recommendation is to initially get in contact

with venture capital funds or maybe accelerators and incubators who are experts or

invested in a number of unicorns in your space and enter into a relationship with them.

Maybe become a limited partner in the venture capital fund with specific strategic rights.

So the best strategy would be to get an information right that you have access not

only to the companies in which venture capital fund invested,

but also into startups that entered the deal pipeline with a venture capital fund,

even though eventually venture capital funds don't invest.

So I worked with one large corporation and its corporate VC,

and they found out that was very,

very useful.

Others enter into relationship outside maybe their geography with incubates accelerators in the space.

And again, they may provide funding, they may provide direct access to experts,

And now some large corporations

set up their own incubator spaces that invite outsiders.

For example,

Johnson & Johnson has such a center,

Johnson & Johnson Labs,

where effectively a founder in a biotech world can come and Johnson & Johnson will

provide with space,

with legal advice,

with funding,

and so on,

without outright acquiring the opportunity.

So I think there are many, many ways to get outside the four walls.

My worry, Lucas, is that I think in order to do so, you have to be aware of it.

You have to be aware that not doing so could be really detrimental to you in the long term.

So that's kind of one of the reasons really why we wrote this, the Venture Mindset book.

Yeah.

No, %.

And honestly, it's a great point.

Yeah, to me, it's a fantastic book.

It's a great reminder, especially for people, anyone that's not in venture.

I mean, it's an absolute must read.

So hands down,

to be able to change your mindset and try to start thinking in innovation terms to

me is very exciting.

So congrats, bravo on the book.

And it's coming out May st, right?

Is that the date?

It's coming out May st in the US.

But of course, it should be pre-ordered now.

Yes, %.

Absolutely.

Please pre-order now.

It's very easy to pre-order on Amazon, on our website.

And I think it's important that if you really would like to change the mindset of

your organization,

make sure that you also pre-order it for your friends,

for your colleagues.

Because let's say,

for example,

you're making decisions in a group where you have a boss,

you need to educate them and you need to ensure that everybody is on the same page.

Yeah,

especially if you're at a corporate,

you're trying to bring in innovation without anyone else truly understanding what

you're doing.

It might not go over very well.

Absolutely, that's right.

And so that's one of the reasons why I often give strategic off-site sessions to

many executives in the same corporation so that everybody gets on exactly the same page.

And then...

Maybe the CEO says, actually just happened last week.

I gave a talk to a very large company and the CEO says,

I'm just going to acquire venture mindset for every single of my decision makers.

That's the way to do it.

Right.

Awesome.

Well, Ilya, thank you so much for joining us.

Really appreciate it and look forward to many more.

Thank you, Lucas.

Thank you so much.