Manu Kumar, Founder and Chief Firestarter of K9 Ventures, talks about how he balances being an investor and a founder. He shares unique insights from his experience founding Carta, HiHello and his other startups, and lessons from his high-conviction type of investing.
Manu Kumar, Founder and Chief Firestarter of K9 Ventures, talks about how he balances being an investor and a founder. He shares unique insights from his experience founding Carta, HiHello and his other startups, and lessons from his high-conviction type of investing.
In this episode, you’ll learn:
[3:32] Why solo GPs prioritize deal quality over quantity, and best ways to catch their attention
[9:08] Entrepreneurs need to have strong conviction in their idea and show that they will take the leap, leave everything else and start their company.
[14:59] Carta’s tough time raising capital; investors thought it was “essentially replacing spreadsheets”
[19:07] Why recruiting a founder rarely works
About Guest Speaker
Dr. Manu Kumar is the Founder and Chief Firestarter of K9 Ventures, Co-Founder and CEO at HiHello, and the Co-founder, Investor, and Board Observer at Carta. He’s also a board member in several companies, including Everlaw, enuma, Nexkey, Bugsee, Traptic, Crave.io Inc., Avoma, Forethought Technologies, Workona Inc., HiHello, Invisible AI, and Daughters of Rosie.
Manu is a self-confessed entrepreneur at heart. He started his first company (SneakerLabs, Inc.) at the age of 20 with $5,000 from a summer internship.
About K9 Ventures
K9 Ventures is a Silicon Valley-based venture capital firm that invests in concept-stage and seed-stage technology startups in the San Francisco Bay Area. K9 Ventures has made more than 74 investments. More than 25% of them are diversity investments. The firm’s most notable exits include Lyft, Twilio, and Osmo. Companies in its current portfolio include Teleo, Invisible AI, Avoma, Forethought, Nexkey, Everlaw among others.
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"We had a very tough time raising capital in the early days because a lot of the investors on Sand Hill and Silicon Valley basically thought that this was not a big enough market. They said: It's like cap table management. Why is that interesting? And you're essentially replacing spreadsheets. How big is that going to become?'
Gopi Rangan: You are listening to The Sure Shot Entrepreneur - a podcast for founders with ambitious ideas. Venture capital investors, and other early believers tell you relatable, insightful, and authentic stories to help you realize your vision. Welcome to The Sure Shot Entrepreneur. My guest today is Manu Kumar. Manu is the founder and partner at K9 Ventures.
It's a Silicon Valley-based venture capital firm. He invests very early in pre-seed and seed stages at startups. In addition to being an investor, he also wears the hat of a founder. He has started a few companies, like Carta and HiHello. We'll talk to him about his investments, what he looks for in founders, and also about his startups that he co-founders with other founders.
Manu, welcome to The Sure Shot Entrepreneur.
Manu Kumar: Thank you, Gopi. It's a pleasure to be here.
Gopi Rangan: Tell us about yourself starting with where you grew up. You grew up in Delhi and you moved to the US and you now live in Silicon Valley, right?
Manu Kumar: That's right. So I grew up in New Delhi, went to high school in New Delhi, and while I was in high school, kind of decided that I wanted to come to the US for college and came to Pittsburgh, Pennsylvania to attend Carnegie Mellon when I was 17.
Gopi Rangan: So you came to the US. I see that you are super overeducated. You didn't only go to Carnegie Mellon for bachelor's degree, you got a master's degree there, and then you came to Stanford, you got a master's degree there and also a PhD. So Dr. Manu Kumar, and that's what brought you into Silicon Valley and you decided to build a profession in the venture capital industry. Why venture capital?
Manu Kumar: I started my first company when I was 20, and honestly, I've never worked for anybody else, like I've never had a boss effectively. So I started my first company when I was 20, built that up, sold that company when I was 25, went directly into starting another company, built that company up.
So, startups is what I know and it's kind of in my DNA and I truly enjoy working with companies from that stage of the inception of the idea all the way to turning it into a viable business. In 2007, I was helping a founder raise capital. I got the chance to go up and down Sandhill Road and look at what was happening there. I felt that there was a gap in the ecosystem. Most of the VC firms were writing a $3 to $4 million check but there were very few people, almost nobody, who was doing like the sub million dollar check back in 2007/08. So I saw that gap in the ecosystem and I'm like, "Gosh! I see the gap, I see the opportunity, and I love working with companies in these formidable stages." That's what got me to think about starting K9.
Gopi Rangan: How is K9 Ventures different from other VC firms? You mentioned the stage at which you invest, which is much earlier than most other VCs. Traditionally, the art of venture capital is in investing in founders and ideas in very, very early stages, which is what you do. But now there are quite a few other VC firms that also invest in pre-seed and seed stage. How is K9 Ventures different from other VC firms?
Manu Kumar: So, first when we started, it wasn't that common to have a solo GP. I had a few folks who have immense amount of respect for leading the way and even showing me that it was possible.
So starting with Josh Kapelman, Jeff Clavier, Michael Dearing, Steve Anderson, I mean, these are the people who I looked at back in 2008, 2009 timeframe and they were doing something amazing. So, I wanted to learn from them. And K9 is different because first it's a solo GP fund. There's me and then there's Stella, my dog on the couch behind me. That wasn't common back in the day. It is becoming more and more prevalent now and I know you are a solo GP as well. I love that model. The other difference for K9 is the stage at which we invest. And again, I describe it as frighteningly early, because I have to be frightened in order to make the investment.
It's usually a stage at which it's like two people and an idea and there's very little proven out both about the founders, the market, the company. There's very little to actually look at in order to decide like, "oh, is this a viable investment?" So it comes down to making a gut call. "Do I believe the vision that these founders are painting and do I believe that they're the ones to actually do it?"
The last difference for K9 is just velocity of investments or the volume of investments. I invest in maybe two to four is kind of the range, but right now it's probably closer to two to three companies a year is what I'm investing in. So very low volume, high conviction type of investing.
Gopi Rangan: So it's a combination of solo GP and high concentration and at this stage at which you invest, which is scary early. Typically, for a founder, there are pros and cons to working with a partnership versus a solo GP. At a partnership, there are multiple people to convince and even when they get advice, depends on how they navigate the politics of the firm. Founders don't have to deal with all that when they work with you, and I really enjoy playing that role with founders as a solo gp.
Manu Kumar: When I was talking to somebody about the solo GP thing and they said, "gosh, your partner meetings must be really short,." And I said, "or they never end." So it's always going on in my head. So yes, I'm sure you feel the same way.
Gopi Rangan: Yes. Typically, VC firms have Monday morning partner meetings, but my partner meeting can happen anytime and it goes on. It's just me, myself, and I. Let's talk about how you find founders or how founders find you.
Manu Kumar: I tend to be very bandwidth constrained. The tightest resource for me is time and because of that, I actually use my network as a filter to actually figure out like who are the people that I should engage with. I was actually just with one of my LPs yesterday, and I was describing to them that I take the approach of, if I decide to engage with a company, I want it to be a meaningful engagement. I want to have a deep conversation. I want to understand what they're doing. I want them to understand what I do and how K9 works in order to see if there's a match. And so it shouldn't be a cursory, superficial engagement. If I'm gonna engage with a founder, then we actually go deep in that situation. So it's really a case of quality over quantity. That does mean that I may not be able to look at every single amazing founder that's out there, but that's just the constraint that I have based on time, and that's just how I have to operate.
So, in most cases, founders are getting referred in. Some of the best referrals are actually coming from other founders in the portfolio. That's a very high trust level of introduction when it comes in from an existing founder, because even the existing founder is putting some of their reputation on the line when they're making the introduction. And that's the thing about any referral or introduction. The person who is making the introduction is putting some of their social capital on the line when they're making that introduction. They have to think highly about the company and the founding team before they're ready to make that introduction.
Executives at existing portfolio companies is another great source of actually getting intros. I have deep connections with Stanford and Carnegie Mellon, so sometimes we'll also get referrals coming in from the academic side of things. But yeah, it's usually all coming in through referral.
Gopi Rangan: So, the best way to reach you is through one of the founders that you've already invested in. Or if the founder was an executive at one of the companies where you've invested, you'd typically roll up your sleeves and work with the team. You've already had a working relationship with them, and that's a good starting point.
But Manu, don't you miss out on great opportunities outside of your network. There are so many amazing founders elsewhere, and you don't get a chance to even meet them.
Manu Kumar: You're absolutely right. And I think about it, but there's only so much I can do about it because there's 24 hours in the day. If I can find a way of having more than 24 hours in the day, then I would love to go broader.
But given the time is something that you cannot mess with , I end up using this as a way of filtering things through. That does mean that I miss out on some amazing founders and amazing opportunities, and that has happened many, many times. I just take the view of if I decide to work with a founding team and that founding team gives me the honor of working with them, then I want to make sure that they're successful. But I don't expect that I will be able to go and find all the companies that become successful out there. That's not possible.
Gopi Rangan: So high conviction matters. The relationship with the founders matter, but as a result, there are some limitations to your bandwidth. You can't engage with everybody, but that's just the nature of the business. Can we take some examples from your past investments? You've invested in some really successful companies like Twilio and Lyft, and in the past, companies like Lucidchart. How did the first conversation, first meeting with the founder happen?
Manu Kumar: Sure, I'll give some specific examples. In Twilio's case, I happen to end up sitting next to one of the co-founders of Twilio at a dinner event. I just asked him, "Hey, what do you do and what does your company do?" And he told me about how they're putting telephony in the cloud. That totally got my attention because in my prior companies, we literally had to go and find a half a million dollars to buy this box that we can then go put in a data center in order to do audio conference.
I'm sitting over there talking to him and I'm like, "oh, so you're telling me I don't need to do that anymore?" and he's like, "Nope, we are moving it all into the cloud and it'll scale up and down elastically, depending on when you have demand and that's how it's gonna work." I said, "That is brilliant." I had familiarity with that domain, and when I heard that, it made sense to me. So that was a serendipitous connection.
Gopi Rangan: A dinner table conversation turned into more of a professional relationship and you were somewhat familiar with the topic and you totally geeked out on it and got into the weeds of how to build this infrastructure. That's great. Very interesting. Shall we also talk about Lyft, because that's a very different kind of company.
There is definitely tech involved, but there's also business model innovation. There's shared economy. There was a whole new thing that was happening at the time when Lyft was started. How did that happen?
Manu Kumar: In Lyft's case, when I met Logan and John, at that time, it wasn't called Lyft. It was called Zimride. And it was called Zimride because Logan had gone on a trip to Zimbabwe and in Zimbabwe they had these vans that are operated by private individuals that would pick you up and take you where you wanted to go. That was the origin of Zimride and the shared economy was a buzzword at the time, around 2010, 2011. I had actually seen Airbnb present at an event, and I think shortly after that I started talking to the Zimride team and I just kind of looked at it and I'm like, "Gosh! Letting somebody into my house is a higher threshold for me. Letting somebody into my car and picking them up and dropping them off somewhere. I'm more comfortable with that." And so I thought, "okay, this makes sense, and I will kind of see where this goes." I really loved working with Logan and John. In fact, I wanted to invest in the company back in 2009, and we didn't come to an agreement on terms back in 2009, and I actually told them like, "Hey, I love working with you guys. Happy to stay in touch." And I meant it. We stayed in touch for over a year, and then finally when they were pulling a seed round together with Ann at Floodgate leading that seed round, they invited me to participate in that round as well. And so honored and delighted to have had the chance to work with both Logan and John and with Ann as well.
Gopi Rangan: This is a very interesting topic for me. The vans in Zimbabwe, similar to that, there are gypsy taxis in Russia. So when I was traveling in Russia, I used that quite often. So I felt like, yeah, there is a possibility here that these were niche markets. But later when I met the founder of BlaBlaCar () he was my classmate in business school) I saw how much he struggled. He worked really hard for seven years and nobody really believed in the business model. Similar to Zimride becoming Lyft, he also changed the name a couple of times before it became BlaBlaCar.
Eventually when I saw Lyft and Uber and they were probably valued at a few hundred million dollars, I felt like this is it. This is the peak. This company's not going to go any further. It is really hard to build a business for which the market is not really there, and they've created something out of nothing, and I don't know how much further they can go. But I was really, really wrong. These companies turned into values at like tens of billions of dollars. That might happen to you as well. Like when you meet a founder, they tell the story and you don't believe in the vision. What happens after that? Do you tell them, no, it doesn't work for me, or do you give them feedback and ask them to go work on it and come back to you?
Manu Kumar: That's a very fine line. In order to start a company, entrepreneurs need to have strong conviction that they're gonna take the leap and go off and start this company. They're gonna leave their job, they're gonna quit whatever else they're working on, and they're essentially gonna go off and start a company, right?
They need to have high conviction in order to be able to do that. I'm under no pretenses that I know what is going to work and what is not going to work. And I kind of describe it like when I feel so strongly that I know something is going to work and it should exist, I will go start a company and that's what I've done. That's how Carta started and that's how HiHello started and that's how CardMunch started. But when I'm talking to founders about their idea and something that they have conviction on, all I can do is I can share my opinion. I will always preface that by saying, "Hey, it's a strong opinion, but it's weakly held, right?" Meaning that I am totally open to learning, and with additional data points and stuff, I'm open to changing my mind. So, when I don't have conviction on an idea that a founder is pitching, I just say, "Hey, I wasn't convinced, but I may very well be wrong and I would love it if you are able to prove me wrong, because I will learn from that."
And I'm also happy to stay in touch with the founding teams as their ideas evolve into something different. There's multiple companies in my portfolio that fit this pattern where the founder came in and pitched me on one idea first and I'm like, "Nah, I'm not convinced about this, but happy to stay in touch. In case your thinking evolves, let me know because I like you and I would love to work with you." And then they will come back a few months later with " Hey, remember that thing that we were doing? We're not doing that anymore. We are doing this now." And I'm like, "oh, this is cool. This I can get behind." And then I end up investing in that company.
Gopi Rangan: This is a difficult conversation with founders and I struggle with it all the time, and I'm also cautious because I'm wrong so often. I don't want to point them in the wrong direction and lead them to things not very productive for them. I'm learning as well.
Let's talk about starting companies. You started out as an entrepreneur at the age of 20, so you have that DNA, but you have decided to become an investor and invest in other companies. Yet, you still maintain that spirit of entrepreneurship and you want to start companies. Why is that?
Manu Kumar: First, in order for me to start a company, the first thing that needs to happen is that I need to get mad about something. It needs to be something that has bothered me long enough and I don't see anybody else coming up with a brilliant solution for it. Because if I did see somebody else Coming up with a brilliant solution for this problem that has been nagging me for a long time, I would go invest in it. I have the opportunity to do both. If it's a problem I wanna see solved, if there's a somebody who's amazing and is solving the problem, I will happily become an investor and we be along for the ride. And then there's other cases where the problem just keeps nagging at me, and I don't find a good team. Nobody's even trying to solve the problem. In those situations, I feel like "damnit, somebody's gotta do it, and so I gotta step up and do something about it." That's kind of where the motivation for it comes from.
I'll use Carta as the example. I did my first investment from K9 in 2009. And when I did that investment, once the investment was completed, I ended up receiving a closing binder that was that thick and a single piece of paper, the stock certificate, with it. Now, the closing binder, great! I'm like, I can keep the PDF and shred the binder. I don't need that paper by any means. What do I do with this paper stock certificate? There was no electronic version of that paper stock certificate. So I called up several VCs and I asked them, "Hey, what do you do when you get these stock certificates?" And their answer was, "well, our CFO takes care of it." And I say, "okay, let me talk to the CFO." And the CFO is like, "well, I walk it down to the bank and I stick it in a safe deposit box, and it sits there for potentially 10 years." I'm like, "this is crazy! I can go and buy stock in Apple and Google and never touch a piece of paper, and I'm buying stock in a two person private company, and I end up with a binder full of documents and a piece of paper that I have no choice but to keep somewhere safe, and I don't know whether it's gonna be valuable or not in 10 years."
That's what became the kernel of what Carta is today. It started out as eShares. So I started looking for somebody to start that company in 2009. It took me three years to eventually meet Henry. Henry was doing a different company when I met him and that company didn't work out. I took him to lunch and I pitched him on, "Hey, this is an idea that I want to work on. Do you want to do this? His initial response was, "no, not interesting enough." Three months later, I invited him to lunch again and pitched him on the idea again. I'm like, "Hey, I know we talked about it three months ago, but let's talk about it again." This time he is like, "okay, let's go try it." That's how eShares started and that eventually became Carta.
Gopi Rangan: I was a big fan of eShares, which has now become Carta, and I use Carta all the time. There are many good things about the company and one of the things that I really liked was that the people who convinced lawyers and other professionals to use the product were investors like you and me. I remember convincing my lawyers and the legal team to like, "stop doing what you're doing, use this product. It saves a lot of trouble for you and for me and everybody. It simplifies things." And it was hard. There was no business development person from eShares convincing the lawyers. It was the internal teams. They got mad at what the status quo looked like, just like how you did. And they became not just customers, but fans of the product.
Manu Kumar: It was also interesting that in Carta's case, we had a very tough time raising capital in the early days because a lot of the investors in Silicon Valley basically thought that this was not a big enough market. "It's like cap table management. Why is that interesting? You're essentially replacing spreadsheets. How big is that going to become?" This is something that I think a lot about. When I'm investing, I look for companies that are either doing new technology or new markets. I put Carta and Lyft both in the category of new market companies, where they're actually creating a brand new market. The one thing you know about a new market is that you have no idea how big it's going to be at the outset.
I think there was a time where one of the phrases we wanted to use was 'NASDAQ for private markets' and I'm like, "Ugh, we're gonna get laughed out of the room when we say that." Right? Today I feel like that's not big enough and there's an opportunity there to actually create a whole new market. I'm actually doing something similar on the HiHello side as well. I'm creating a new market.
Gopi Rangan: It's hard enough to start a company and make it successful. You created a whole new category. I want to talk about HiHello. But I'm very curious. I failed at it so many times, which is why I'm asking this question. Founders, when they start a company and it's their baby, they stick with it through the ups and downs to make it successful. Even that is hard. But when you pitch to a founder and say, join me, I have an idea, and make it your baby, it's much harder.
I've never had a successful conversation with a founder who I try to recruit and say, "Hey, here's an idea that I really think this needs to be solved, and you should take this and build this, and I've done the basic homework for it." It's never worked. What kind of founders do you look for when you want to start a company with a problem that you're mad about?
Manu Kumar: First, you're absolutely right. It is very, very rare for it to work. I'll give the reference with the movie Inception. In Inception, they talk about like you put an idea in somebody's head and then it grows and it becomes their idea. When I think about this process of when I'm starting a company with somebody else, that is how I think about the process.
That idea is essentially something that you put into somebody's head by talking about it. So, it is being transmitted through my words and through my mouth into somebody's head but it has to take root and it has to grow, and it has to become their idea in order for it to become successful. And that doesn't happen often.
I gave the example of Carta where I came up with the idea for that in 2009. We actually co-founded Carta in 2012. It took me three years of pitching that idea to different teams and different founders before it actually took root. It's not an easy process by any means.
Gopi Rangan: But you've done it a few times and now you started HiHello. How did HiHello come about?
Manu Kumar: So, I've always had kind of what I described as a love/hate relationship with business cards. On one hand I love them. I literally used to collect business cards because it would be fascinating to me to actually see like, who's this person, what company do they work for, and the logos and the branding. I still remember going into my dad's office when I was a kid and playing with his business cards on his table. And I also remember the Palm seven when it first came out back in the late nineties where you could beam a contact from one person to another. And I was like, "this is the coolest thing and I want everybody to have a Palm seven just so that I can do this."
Of course that never happened. We come across to smartphones and still like we are still handing out little pieces of paper. Little dead trees is how we give people like, "this is who I am and this is how you contact me." So in 2009, I co-founded CardMunch. It's a very similar process as Carta. I was actually talking to multiple teams and found a team to work with and co-found CardMunch.
The idea was very simple and more narrow, which was you take a picture of a business card and it comes back to you as a digital contact. Four months after we launched the product, we got approached by LinkedIn and LinkedIn effectively said, "Hey, we can either buy you or we can bury you." It was a buy or bury decision. So we said, "okay, we will team up with LinkedIn, and we sold the company to LinkedIn. But LinkedIn could not execute. They kind of ruined the product. They eventually killed the product. There were a lot of people who loved CardMunch back in the day, but LinkedIn just didn't do it right, and it ended up dying.
Meanwhile, I'm just sitting here thinking like, "Gosh! I had a big idea behind what I want to build. And that idea just never came to fruition, never saw the light of day." Once LinkedIn got acquired by Microsoft, that became my catalyst moment because I'm like, "Great! LinkedIn never solved this problem for me, and now it's part of a bigger company, so it's even harder for them to solve this problem." that's what gave me the conviction that, "oh, there's an opportunity to actually create a new company in this space." And that led me into starting HiHello.
Gopi Rangan: What does HiHello do?
Manu Kumar: So, HiHello. Does digital business cards. That's our entry point. That's the core of what we do. You can now exchange contact information with somebody just directly and simply on the phone without needing any other physical device or having a paper business card for it. So very, very simple idea at its core. But what we've discovered is that software is eating the world and software is eating business cards as well. And now companies are basically coming to us and saying, "Hey, we need a SaaS platform that is actually helping us manage this for our entire company." So, we started out on the individual side, but we now service both individuals and large companies for digital business cards.
Gopi Rangan: Very interesting. What a journey! Something that nagged you. For many years, you attempted to start a business called CardMunch, sold it to LinkedIn, and you were annoyed that it didn't really bloom into the solution that you anticipated. So you came back and you started another company to solve the problem, and now it's been a few years and it's off the ground and you're running it. Congratulations.
Manu Kumar: Thank you. And I'm convinced that there is a massive, massive opportunity here to build a big business. It's been a lot of fun for me to be on both sides of the table and be an investor and also be a founder and CEO at the same time, because I get to learn on both sides and with the learning I get on each side, I'm able to apply to the other side as well. So, it's been a fascinating journey.
Gopi Rangan: We're coming towards the end of our conversation, and I want to ask you about your community involvement. Is there a nonprofit organization you are passionate about? Which one?
Manu Kumar: I'm very much a dog person and any organization that are supporting dogs has probably got a soft spot for me. I actually keep that fairly anonymous, so I don't like to talk about it and just kind of, I do what I do. I don't wanna kind of publicize it basically.
Gopi Rangan: Okay. We'll keep it under the wrap. Manu, thank you so much for spending time with me. This is incredible. You've given very specific examples of your investments, your journey as an investor and how you start companies. I look forward to sharing your nuggets of wisdom with the world..
Manu Kumar: Thank you, Gopi. This was a lot of fun to chat.
Gopi Rangan: Thank you for listening to The Sure Shot Entrepreneur. I hope you enjoyed listening to real-life stories about early believers supporting ambitious entrepreneurs. Please subscribe to the podcast and post a review. Your comments will help other entrepreneurs find this podcast.
I look forward to catching you at the next episode.