94 - Eurie Kim, Forerunner Ventures

Eurie: I've never been a grass is greener kind of person. I always think my grass is the greenest, my baby's the prettiest. So if you've been in this industry long enough, which you're starting to as well, you see that every company, no matter how hot and sexy it is, has massive ups and downs over the decades. And some you think are crazy winners and they go kaput. Some you think are never going to make it and they suddenly are like the darling as it's IPOing like Il Makiage. And so it's never a winning proposition to think that someone else got it right and you didn't because you just don't know what's happening under the hood.

Conor: Eurie is ultra smart and super impressive. She's helped grow 400 ventures from$ 40 million in their first fund to over a billion dollars in their most recent fund last year. And a lot of that's predicated on the investments they made. They've picked some of the biggest winners around Dollar Shave Club, Jet. com, Bonobos, Glossier, Farmer's Dog. I think you're going to learn a lot today. Remember, if you did enjoy, be a friend, tell a friend. Thanks guys.

Speaker 1: Explore the minds and marketing strategies behind today's winning brands and businesses. Tap into the power of the Creator economy with Earned by CreatorIQ. Here's Conor Begley.

Conor: Hi, everyone. Welcome to the show. Today, I've got Eurie Kim, the managing partner at Forerunner Ventures on the show. Thanks, Eurie.

Eurie: Thanks for having me, Conor.

Conor: So actually, we're going to talk on kind of a more somber note. Somber is probably the wrong word, but just I think the last 24 months have been a little crazy both within the venture capital markets particularly. But as that affects both software companies, we've seen it in terms of multiple compression. D2C brands, obviously you've had, there's been some struggles there in the public markets in particular. So want to talk about that. I think starting out, one of the things that I've seen happen is as the public markets have essentially closed for both software and some of these direct to consumer brands, it's limited some of the exit paths for these different brands. I'd be curious, how has that affected the way that your portfolio kind of approaches the market? Have you reconsidered whether or not the public markets are a good exit path for you guys? And just generally, what have the last 24 months been like? It feels like it's been 10 years and 24 months.

Eurie: I like this question. We're starting at the end for the beginning of our chat, but let's see. To answer your question very specifically, are we reconsidering this as a path for our portfolio companies know? We're actually cautiously optimistic, and I think in this moment, yes, it's been a really difficult couple years. I mean a couple of years, right? 24 months is a long time for it to be sort of opaque and very uncertain. But ultimately, we're starting to see glimmers of hope. There's a couple of successful IPOs in the past, even month. I am sure you saw Cava, a Mediterranean fast casual restaurant chain. It went public in June. I just actually looked up before our chat, it's trading at almost$ 6 billion, which is 9x trailing 12 months revenue. That's a pretty good multiple. And then Oddity, which is a tech and AI driven beauty brand platform, which just went public last Wednesday, now trading for about$ 3 billion. That's more like 7 or 8x trailing 12 months revenue. So what does that mean? Are we back in business? I don't know. I think that there are a lot of great companies that have been queued up for quite some time, and they have the ability and the flexibility to have the optionality and to decide I'm not going to go public when it's freaking ice ages and people are super- duper cold out there. You want them to be a bit warmed up, but there's plenty of articles coming out saying, oh, the pent- up demand, people have wanted to do work on the buy side, but there's just nothing to underwrite. And so I think you're going to start to see, okay, well these two went pretty well and I'm not as familiar on the enterprise side, but at least on the consumer side, what else can we start to look at that has just a good business, good fundamentals, it doesn't feel as risky because you kind of have seen them weather the storm over the last couple of years? So we're cautious as always, but optimistic.

Conor: Yeah. I think it's a really good sign. And like you said, I think there's a backlog of these companies that want to go public, whether it's software or consumer enterprise or consumer. And I think Il Makiage as well as frankly Cava, I think caught the markets by surprise. They weren't somebody that I don't think either were getting a lot of buzz until they actually went public. And then that's what actually got the attention to them, which is pretty cool to see.

Eurie: And for another reason too, I think the practical benefits of any pullback or disruption in the market on the negative side is that companies that are going to survive that are actually stronger coming out of it. So all of their just fundamental economics looked better. Il Makiage was planning this for quite some time. I mean, it's kind of over a year in the making. And so just a year later, they're that much bigger, that much better, that much stronger, having shown now that the growth of another brand that they launched last year called Spoiled Child. But all of those things make it like, oh, the investment community is like, shoot, there's some good businesses still being made. It's not all doom and gloom. And you're like, well obviously. They're oriented to be pessimists. We're on the early stage oriented to be optimists. So even in a downturn, any reasonable VC is like, okay, here's where we can really hunt for some great winners. We're going to do it now, because The market is so contrarian. And so I think that's the fun part about our job is you can always find a reason to be optimistic.

Conor: Yeah. Especially when you're looking at these time horizons like, I'm investing today for where the market's going to be in 5, 7, 10 years, right?

Eurie: Yeah, definitely.

Conor: And so I'd be curious actually, your role within those organizations. So you come in really early, somebody's got a new idea. We're talking about OURA, right? Before even a lot of the products built out, you're in, you're investing, you're helping them grow. As they get bigger, do you guys start to kind of take a step back or are you still pretty involved? Have you helped a lot of these founders navigate this last couple years?

Eurie: Yeah. So when we started our firm, we were a $ 40 million seed fund back in 2012. Where now, I think there's 2. 5 or so billion under management across all of our funds. But the funny thing is I'm still sitting on almost all of the boards I got on in those early 2012, '13,'14, that early timeframe. And some of that is because we've also scaled our firm and our business and our experience set, and we were the first to be really dedicated to the consumer ecosystem or the technology driven consumer ecosystem as a firm. And so our experience set is still relevant on the growth side and the kind of inflection point over to IPO side as it was in the very early days, but not everybody does that. If you're a seed focused investor, that's your bread and butter. You're trying to get them through that zero to one over and over again. We find that so much of the experience we have over the 150 companies we've invested and makes it helpful to bring that back to the early stages and say, okay, I've seen this whole journey. Actually, there was this amazing company I was looking at this past week in the financial services space, consumer financial services space, and it is such a great sort of consumer proposition. But now having seen Chime scale over 12 years, you start to realize, well, look, at the end of the day, if you're building a bank or a Fintech company, there's only so many ways you can skin the cat by the time you're at scale. And so let's think about what does it need to look like on the earlier side such that the go- to market is this unique thing. But over time, you really do just want to do everything for your customers on this sort of financial umbrella. And so being able to see the whole arc of that company chapter by chapter, I think gives you unique insight to have some voice at the table. And I would also say founders often find that as they have the later stage investors. Those investors are definitely there from a analytical standpoint. They've looked at your company, they've done the multiples, they've done the DCF or whatever else they're going to do, and they've decided this is a good investment. And so you lose some of the emotional connection. Whereas when I invested in the Farmer's Dog back in 2014, 2015, they were cooking dog food out of a kitchen, their kitchen. It had terrible unit economics. It was way too expensive and nobody thought it would be a big business. And now, it's a massive business and I'm still on that board. So I think it's not every company that we would be relevant to stay on the board for so long or want to to be honest because we also have our own dynamics where we need to be freed up for our bread and butter, which is great.

Conor: You can only be on so many, right? Yeah.

Eurie: Exactly. But in this particular arc of the last 12 years, there's a handful of companies that are teed up to do exactly what you kick this chat off with, which is exit. And once we see that whole story play out, I think it'd be great to bring that into our Forerunner sort of knowledge base and experience that.

Conor: Yeah, that's fascinating. I hadn't really thought about that kind of arc of the company and your visibility on that being so valuable in the early stage. I mean, we see it now. I'm similarly about 12 years into this, 11 and a half years into this and doing some advising, doing a little bit of investing, and you talk to people and it's like, oh, I thought this was... You kind of forget that these things aren't common knowledge that these things are not like, that you had to learn them the hard way, but it ends up being so impactful to the businesses themselves, which is really cool.

Eurie: Absolutely.

Conor: So for you, as you're thinking about the next kind of this next wave, the next 10 years, we're looking out 10 years from now, what are the things that you think? What are your things that you're investing behind? Obviously, you guys put some money into AI with Boombox, right? But what are the things that you're really excited about over this next 10 years?

Eurie: I love how you framed it that way too, because when we were hitting our 10- year anniversary, 2022, we did exactly that. We said, " Hey, we've been in business for 10 years, it's been a ride. What's next?" Yeah, we got to keep it going, right?

Conor: We didn't but keeping mistakes, right? It's the exact same, doing everything the same as the first day you started, right? I'm sure.

Eurie: Totally. And when we thought back, we said we came to market because the consumer had just a massive behavioral change, mental change, cultural change because technology was still in its infancy and really just getting started on social. And thinking about a decade's worth of new companies coming to life because of that digital proliferation, that was what we invested behind and that was what was so different, not just the technology innovation in and of itself, because I think a lot of people raised their firms and made their investments based on the actual tech features or nuances of infrastructure building. But ours was because of technology, consumers were actually behaving differently and thinking differently, and as a result, spending differently and becoming in all different people than generations before. So as we are thinking about in 2023, what's the next 10 years hold? We actually did a revisit of consumer research from the beginning where they call it first principles or what have you, and said, who are we as consumers? It was the millennial for literally 10 to 12 years. It can't possibly still be that. What's Gen Z? Is that a whole thing? Is that going to be another decade of investing, or is it something more nuanced? And then, of course, COVID is happening and Black Lives Matter. I mean a million things have happened in our world over the last handful of years that we just felt like it's probably good to do a pulse check. So we went back to our roots. Consumer's always been our North Star. So we did a big survey. We looked at archetypes of different customers and just tried to think, are there new behaviors emerging that we can start to see that then would present themselves as investment opportunities? And that's the thing, whatever you're seeing now, it actually doesn't matter because we're trying to invest in something that's going to become a behavior five years from now. Even OURA ring like I invested in 2019, and I wasn't even the first dollar in. They were already five or six years in from trying to come up with the gadget, the actual hardware piece. And so we think of all of our future fodder for investment ideas as let's observe the customer and understand what are the new needs, what are the new sort of mental models, what are the priorities. Things that may not seem as obvious today around how much health is taking up mindshare. It seems like, oh yeah, no, duh. But that's like the average person in America is thinking about health. The majority of their time, it's basically half health and half financial security. And that makes a lot of sense because coming out of COVID, those are the two things you didn't have. You lost your job or you didn't know where the next check was coming from, and also you were thinking you were going to die from COVID. But as a result, something like an OURA or something like all of these health and wellness platforms, different medical services, anything that can distribute access more efficiently and effectively, especially with our medical system being burdened with not enough supply side providers and way too much demand, these are all things that we think about. So when we pulled all that up, we actually have a tagline around. It's really back to the basics, serving fundamental human needs, and really thinking about what are those traditional needs in the context of non- traditional customers. Because we as individuals have changed and evolved, and when you think about diversity as the big D diversity, there are a lot of different people with very personal needs and personal points of view when they think about solving these needs. And it's very difficult as a company to be a large enough company to be venture backed, but still serve individual nuanced needs. There's actually a company called A- Frame that we invested in a couple of years ago where if you think about personal care products, I mean there's billions and billions of dollars at Unilever, P& G, all of these different brands that have scaled to multi- billion dollar businesses, but so few of them are actually resonant. I think for the first time this past year, it was a majority non- white American. For the first time in America, the majority is non- white, but starting individual brands for every single shade of the rainbow is not actually a scalable effort. And so this platform thinks about how do you aggregate the brand building R& D marketing through really important celebrities, distribution through retail partnerships, like aggregate all of the business plumbing and then allow for more brands to be built for more customers. So we just think about how can you create a new business model based on the new consumer need and behavioral shift. And ultimately, this is an exciting time to be coming out of so much change when we think about the opportunity ahead.

Conor: Yeah. It's fascinating this concept of, right, so creating a brand today is easier than it ever was before. More access to information, limited shelf space online, ability to connect with these niche communities. So there will be more and more brands over time that will proliferate, which then the assumption is that there'll be less big ones because you take a Lancome and you break it into six different parts. And so one of the things I've been surprised about that hasn't really occurred, and I'd be curious what your perspective on this is there's been different thesises and approaches to like, well, hey, we're going to combine a bunch of these companies, or we're going to launch a bunch of different brands like Il Makiage is trying to do, or Oddity is trying to do there and not to a large degree of success. There hasn't been a competitor to a Unilever or a L'Oreal or whoever you want, say whatever conglomerate you want to talk about. And in a lot of ways, the exit path has been like start the brand and then sell to them rather than become them. What do you think has prevented that from occurring? Do you still think that's a good idea? I'd love to hear your thoughts on that.

Eurie: No, it's a great line of thinking and we've thought about it a lot. The reason why Estee Lauder, P& G, Unilever, the reason they scaled is because they owned the distribution channel. They had all of the retailers in their network and they had the shelf space. And so if you wanted to start a brand, great, you get that started. But ultimately scaling would require you to have all of these relationships with every pharmacy, all of the drug stores, the mass merchants, all of that. And it's just impossible for these small brands to get those relationships unless they're truly breaking out. So you still see some brands being able to do that, but the sort of general consensuses. The buyer can't possibly have a hundred different little relationships going on. They'd rather go to Unilever and get 50 there to really stock the shelves and then fill in with the very cool brands or the very sort of unique brands or what have you. But I think that was historically over the last many decades what allowed for that business model to work as you own the distribution channel. But then when you thought about all of these customers now buying things online like Dollar Shave Club, that was outside the distribution channel. You're like, wait a minute, we don't know how to do that. We don't have a website and we actually can't have a website when you think about Unilever, P& G, because they have their own relationships. And so that's what created white space for new businesses to build direct relationships, whether that was beauty brands and personal care products or whether that was financial services or healthcare. OURA is a direct to consumer brand. It is a product, but ultimately, it's a healthcare platform that is starting directly with customers and then hopefully in other ways. But when you say people have thought about that, it makes a lot of sense from a business case perspective, good old business school case study. So let's aggregate these all together. Let's cut out some costs. You could have one marketing team marketing five things. The challenge of that, I think, we all have lived through is how hard it is to be efficient on ad platforms today. There was a time where Instagram, Meta, broadly speaking, there was real opportunity there to spend a dollar and get$2 out or$ 3 out. And that time is a long gone. That was way 2010, '12. It was a long time ago. And so that ability to take in more brands, it doesn't create leverage on the dollars of marketing. You still have to acquire all those customers. And so people had pitched, okay, it's the same customer. So I know Conor, he buys not only Dollar Shave Club, but he also buys a Casper mattress and he also buys Warby Parker. And so that's what's going to allow me to then be more efficient with CAC, and it just didn't play out. It was too difficult. And then you as Conor was like, okay, well, I still have to go to all of these different websites to buy these things. So it's not like it's one retail experience and I can buy everything at Macy's or everything at Target. The A- Frame consideration that I just mentioned is in fact thinking about that business model challenge and saying, what if we did have the relationship with Target, Walmart, Ulta, and Sephora? And you recreated the power of the historical brand platforms, but you did it with diversity in mind. And you said, we may not be able to make a 500 million skincare brand just for Asian women, but could you do it if the brand only needed to scale to a hundred million? And we could do that on our platform, and then of course at some point in time, we could graduate that and sell to Estee Lauder or what other companies would be interested.

Conor: Totally.

Eurie: So I think that was our thesis there is where are the efficiencies that need to be unlocked to be able to let that leverage come through and come through in this sort of margin standpoint, not just how big can the business be, but it has to be a high margin business.

Conor: Well, I think it's not only necessarily the relationships, but it's also the leverage, right? So Unilever has an incredible amount of leverage over their distribution channels, and so how do you replicate that? And in a lot of ways, the other thing that's occurring is a lot of these direct to consumer brands have realized that being purely direct to consumer does limit the number of customers you can reach. We are still in a place where the majority of revenue occurs offline. Even though there was a perceived acceleration during the pandemic, it's really gone back to the trend line. And so how have you seen your brands adapt there to go from a brand that's purely ecomm, direct to consumer ads to this kind of retail environment that they need to plan?

Eurie: It's a really different muscle. I think the benefit about it is we were never of the mind that retail was dead. And I think there were plenty of VCs who were touting that 10 years ago, but we thought, hey, look, going direct is not new. First of all, it's happened many times before. People used to do it by way of having a store.

Conor: TV, yeah.

Eurie: Or like direct response, TV. There's a lot of ways to go direct is just direct to the consumer without a retailer involved. But the sort of coined term DTC in our minds was always a go- to market strategy that capitalized on the fact that the leverage was in these social platforms and that was the advertising and marketing advantage. And look, that's still a channel today, but it's not a channel with a lot of alpha to be had. Alpha meaning just like upside. You just have to do it, try to be as good as you can, but it's not necessarily going to make you crazy successful. But you think about all the companies that debuted online over the last decade who is still only direct ecomm only to their customer. I am assuming not too many. The ones that are at scale, they have their own stores. Warby has 200 plus stores away, Glossier. You think about OURA, OURA just expanded into a partnership with Best Buy. And that was because, hey, look, again, it's an educated sale. You need to understand why is sleep important. Now I understand that now it's like, okay, sleep is the biggest foundational layer of health. What other health things do I have in mind? Is it activity and performance? Is it women's health and fertility? Is it sleep apnea and stress management? There's all these different things, but sleep is that layer. And so trying to do all of that just through content online is difficult. Me telling you about my experience is what helps you understand and bring it to life. And so we felt like it was the right time to just be closer to the consumer than even digital is not close enough. I actually physically want them to come in, try on the ring, see how light it is, how comfortable it is, understand with stories from sales associates, how they're using it. And so I think that the muscle is new. It's hard to do it from the very beginning, but you have to figure out what's the right channel to start and get going. And then from there, you got to figure you need to do the rest over time anyway. And so how do you build the foundation so that you can continue to add to it effectively?

Conor: One of the things just as you're talking that I've never had this thought before, but I think it's right, where retail becomes really important is actually, and it's kind of counterintuitive, is on the new customer acquisition side because you want to get in, you want to touch it, you want to feel it, you want to use it. Okay, I've had an iPhone for 10 years. Yes, I could go into an Apple Store, but I kind of know what it's going to be like. I can look at the specs online and make that decision or I've had an OURA ring for a long time. I want to buy the new version. I don't necessarily need to go into a store and touch it and feel it, but that first time you buy something, particularly any substantial purchase of a physical product, you kind of want to see it, feel it, touch it, use it, make sure it's good. It's fascinating, never thought about that or Warby Parker would be the exact same thing, right?

Eurie: Absolutely. And then from there it's like, okay, well Warby does eye exams and I mean I literally got my contacts and my eye exam there a couple of months ago and you're like, okay, is this the DTC brand as it was previously considered like that name or are we talking about an optometry company? It's wild how much these definitions have expanded. And we actually had a couple of Wharton interns this summer and they were doing consumer research one particularly on Gen Z, but I thought that there was an interesting stat around Gen Z really focused on convenience, and that in their minds was being able to go into a store and buy something. They didn't even want to wait the one day for Amazon. And I thought, have we gone completely full circle here where retail is the most convenient? Amazon's not even good enough. We're talking same day delivery, and I can't be bothered to wait. I'm going to go into the store and buy it. It's so fun to see that because that's why to our thesis, it's like going back to the basics. These are the traditional behaviors that we've seen before, but the customer is super plugged in all these different ways. And so how do you understand what that person's needs are going to be and where do you sit as a new company? What problem are you solving for them? And you got to solve more problems over time. So the first problem is I just get started. I build a relationship with the customer. We're talking about sleep with OURA. We're going to start there. But 10 years ago, we didn't think we're going to be a women's health company, but look how much we can do for women in their health journey. So here we are opening up the top of funnel, being able to become a bigger and bigger organization as a result of that.

Conor: Yeah. Well, I was telling you, I've already referred the product to my sister- in- law who's considering having on a baby to track her ovulation cycles using OURA, which again, like you said, I think on the one of the more to your point about putting yourself in the mind of the consumer, a couple of things. One is like, okay, the world has changed. There's a lot of people that are remote today. I go from my living room to my office and back, and I want to get out of the house. I don't want to online shop.

Eurie: You need a reason to leave.

Conor: I need a reason to leave, right? And then even simple stuff, I don't know why I'd never thought about this, but I go to a personal trainer and I was talking to him about grocery shopping. He's like, "Yeah, the reason I really like grocery shopping," He's like, " I get a walk- in." I was like, " Yeah, I never thought about that." I go to the grocery store, I spend 20 minutes walking around. You obviously have the convenience of online shopping, but it's funny to see it come back in such a meaningful way.

Eurie: When it goes back to instead of that being a job to be done or a task to be done, it's actually pretty fun to go to the grocery store. You look at all these new things. You see things that you probably wouldn't have bought if it was just on Instacart, but you're like, " Oh gosh, those peaches look so juicy. I can smell them from a mile away." So here you are enjoying that time and enjoying that experience. And so we often think about what does that in- person touchpoint need to look like over time? And you think about retailers in general who are obviously suffering and have suffered really from the last decade, because it's just been a whole heap load of challenges to navigate. But it's not like it's going to go away. It has and will continue to change. And I think what doesn't change is that people still want advice. People still have mental sort of overload when there's too many options. So they need curation. And so what is the best way to be able to deliver your customer, whether they're looking for, again, financial services or healthcare or whatever? Education, what is the best way to deliver the efficiency of software and technology and AI, you can throw that in there, with the experience, the trust and the relationship building of a person? And we have a education company called Juni that's navigating the same. Pre- COVID, they were doing coding classes, one on one but digitally, because the whole thing about learning technology and coding in general is that you don't need to be in person. You guys are on the computer coding. So that is one subject we can definitely do it remotely. And then, of course, COVID happens, everything goes remote, but kind of upends the whole educational system. And now people are so much further along with their ability to do things digitally, but how does then that experience take in AI? Does the high school kid want to be tutored by an AI assistant or do they actually kind of want a person?

Conor: Does he want to go in? Well, the irony is eventually Juni will be doing in- person teaching at some point.

Eurie: Totally. It's a re- imagining Kaplan. You're like, great, we're back to Kaplan. Okay. It's a big circle to get back to that. I used to teach at Kaplan when I was in high school. It was great.

Conor: So let's do one more on the future. You mentioned AI, so I want to talk about that and then we'll talk more, because I'm really fascinated about the journey of Forerunner over the last decade. But on the AI front, like I said, you mentioned you made an investment in a company called Boombox, which is doing AI integration into music production and these kinds of things. What's your perception of AI? Is it overhyped, underhyped? How do you see it impacting your brands and the ecosystem? What are some of your thesises on it? Because obviously, it's a pretty hot topic.

Eurie: Yeah, it is a hot topic and we're really excited about it. I think that whether it's hyped or not, I mean it is hyped, but it's for good reason because it's a meaningful shift in what we can all do, whether you are AI first, and so it's a new experience that fundamentally couldn't be delivered without AI or it's AI powered. So it was an existing experience, but it's now much more efficient, cost- efficient, time efficient, resource efficient for a company to do. So earlier this year, we actually did a big survey with all of our founders and just said, " What do you think about it on the front lines? How are you thinking about it across your companies and your organizations?" And to be honest, 70% of the organizations were already thinking about how they were going to integrate it into their backends to scale ops. So whether it's marketing copy or whether it's customer CX tickets, customer service tickets, whether it's thinking about financial planning, is there a way to automate some of that projections? Anything that takes a long period of time but is fairly tactical and all you need to do is put in the data that is something that can be AIed out or AI driven or AI powered or any of those words. It is rare to see entirely net new experiences on it if you're doing the actual LLM or if you're opening AI and you're actually creating the ChatGPT system. Those are more infrastructure layers, and when I started the conversation, the consumer is our North Star. So how is the consumer going to embrace AI and think about, there's a lot of AI assistants? Well, do you want 12 assistants? And you just simply ask yourself if you had the money, would you hire 12 assistants people? One for personal, one for your love life, one for your financial plan? No, you wouldn't. It'd be like, " Oh, my God, that's terrible." You would maybe have one or two, right? You'd have one for family, one for work. And so we often think about that. It's like, okay, well the behavior and what the AI bot or whatever is going to be delivering you, the mechanics are the same, but the context is important. And so the way that we think about opportunity sets going forward is what is the mental context? How would you think about the actual service being delivered and how that relationship can grow over time and what amount of that is going to feel good for the customer to have an AI assistant deliver? And what part is uniquely a human? We have a company called Curated in our portfolio, which has incredible experts in skiing and biking, a lot of enthusiast sports. And historically, they were the experts you would get on the marketplace. You'd talk to Conor, the ski instructor in Vail, who's totally just an awesome guy and be like, hey, I'm just starting. I'm going to get some skis. I want to figure out what I need. You would be telling me you would be the retail associate, but you're running your own business from a passion that you have. And so what a great opportunity to then leverage AI. Why do you need to go and scan all these websites for all of these options for a 5'3 woman? Maybe you could have five options delivered to you and then as a result, you could spend a lot less time, but still give me your viewpoint on the top two options for me. So I think those are always that some of the things that we were already thinking about in the portfolio and consumer needs states that we're delivering solutions for can be just accelerated in a great way. We were also thinking about when mobile was first to think, and we were often pitched like, oh, we're going to be the mobile company for this. It was like the mobile part of it was somehow part of the pitch. And I think right now, you see how many companies pitching you, which is like, I'm an AI company for that or something that AI. It's all AI. I mean, everybody's got the, like literally, it's all going to have AI.

Conor: It's getting integrated everywhere. Yeah.

Eurie: Yeah, we laugh and we say, well, when everything gets AIed out, then what happens to software as a service? What happens to enterprise solutions? What happens to all this stuff that historically has been the power of it is that the technology requires a lot of engineers who are super smart. If that isn't the moat and everything can be repeated pretty quickly through model, then it goes all the way again, back to our theme of back to the basics. It gets back to the human experience. It gets back to those teams that understand their customers so intimately that they actually know what problem they're solving, not just, I'm just going to help you make more money. It's like, okay, but how? What part of my day do I have more time to do another job? What's my mental model for all of that? And that's where hopefully we can have an advantage for the next 10 years because that's what we're good at.

Conor: Totally. Yeah. It's an interesting problem on the software side. Software goes through the exact same thing that consumer brands are going through, right? It's easier and easier to code. It's easier and easier to build software. You have people solving more and more niche solutions. So is there an opportunity to build the next Salesforce or the next Google or the next Apple or whatever? It's a question, right? Yeah. And then, oh, I lost it. You said something. Oh, on the needs of the consumer. I love that mindset. So I love starting with what is the problem I'm solving for this person. How do I help them solve that? This has stuck with me for so long. I don't remember why so much, but they asked Bezos, what do you think is going to change in the future? What do you think about the future? He's like, " Actually, I don't really focus on that. What I focus on is the things I know aren't going to change." He's like, " I know people on Amazon are always going to want it faster. They're always going to want it cheaper, and they're always going to want more options. And so what does that lead me to? Well, drone technology can help me get you there faster and cheaper, so let's invest in drone technology. It's not about the technology itself and saying like, 'oh, this technology is the future,' but saying,'how does this technology help me solve the consumer problem of getting it cheaper, faster, and having more options?'" And everything's built around that principle.

Eurie: I think that the distillation of those values is so important. And what's funny is I'm an avid Amazon customer. My three- year- old is like, " Just get it on Amazon mom," really bad actually. But what I think would, because I'm going to give Bezos some advice here, but the consumer has actually shifted. It's not just faster, cheaper, more options. I don't want more options. I want better options that are actually relevant to me. And the fact that I got to scroll through seven pages to get to something is a terrible experience, and I don't actually need it faster all the time. What I need it to be is in less effing boxes, because the box situation is out of control. And my kids, they just look and see that like Santa Claus is coming every day and they're like, " Oh mommy, I love watching you open boxes." I'm like, " Oh, God, I hate this." I hate the whole experience of having all these boxes so that if I could ask Bezos to please fix something, it's just less boxes, less options.

Conor: Two things, one agreed. I looked at it at one point, I looked at my Amazon purchase history, and it was like in the last 90 days, I'd made over a hundred purchases. It was a shocking.

Eurie: It's your convenience store, your corner convenience store.

Conor: Okay. All right, let's talk about Forerunner. So when you started, like you said you're at$ 40 million in capital. I think your most recent fund was a billion dollars. So your 25x the size of your first fund, was it just you and Kirsten at the start, just the two of you?

Eurie: Yeah, we had an analyst part- time who was doing some work out of L.A., but it was really just more Kirsten and myself. And then Nicole joined us maybe a year later after we closed that first fund.

Conor: So what I'm curious about is, again, to grow 25x over 12 years is very, very impressive. And I think what's also interesting is not just the success of the funds and the success of the companies that you've picked, but also the success of the Forerunner brand. I think that you guys have built a brand that's well recognized and respected and trusted. I'm curious, when you look at the success that Forerunner has had, what do you think are the reasons why you've had that success, especially over such a long period of time?

Eurie: Great question, Conor. We think about it a lot. We want to keep it going. I, a hundred percent would start with the word focus. And when you rewind back to 2012, what was happening back then was a handful of people starting seed funds, and really they were sole GPs or a couple of people getting together with an orientation around a stage, sort of this early, early pre everything stage. And we never thought of ourselves as a seed fund. We came to market, my partner, Kirsten Green, who founded the firm, the thesis was all around the consumer and this whole narrative that there was a step change. There was fundamentally different behaviors coming to life that we have never seen in the world before. And as a result, everything was going to change and it did, everything did change. And nobody wanted to invest in consumer. That was almost like a bad word. Everyone was like, oh, I don't know. There's a lot of money being lost. And we're thinking here like, have you heard of Amazon? That's a consumer company. Have you heard of eBay? That's pretty good. There's some good consumer companies out there, but for some reason they just couldn't get their heads around what consumer would mean in this new world. And so we spent a lot of time narrating the story of what was happening and why technology was going to fundamentally provide different opportunities where the consumer was actually going to be in charge. It was our individual dollars that were going to create multi- billion dollar. Back then, it wasn't billion. It was multi hundred million dollar businesses. And so in those early days, I think the LPs basically said, well, we want seed stage or the smaller funds very specific to this ecosystem. And then we want experts, experts, whether that's healthcare or something else. And if we had an expert in consumer, that'd probably be okay. And so we were in the bucket of, okay, we're experts, we're focused. They don't know how we're going to make money, but they figured if anyone makes money in consumer, it would be us. So why don't we just bet on them? And for fund after fund, we continued to explain, look, consumer is not just a lipstick or a shoe, consumer is Chime. Chime was an investment out of our first fund. Hotel Tonight, that was the first and first fund, Dollar Shave Club. Yes, that is personal care, but that was in fund one. But these are a lot of different business models that the consumer now has access to because of the ability to buy things online and through mobile. And so that helped focus with fundraising and where they would understand we would be focused as GPs and where our investments were coming into play. And it also helped in market with founders to say, why are you going to go here instead of first round or any other amazing seed funds? Well, our point was we're not a seed fund. We're early stage. Right now, we do some seed because obviously we're a$ 40 million fund, or we actually did some series B's back then too.

Conor: Oh, interesting.

Eurie: We always thought we'll grow with our opportunity set. And in that first chapter of the story, the best consumer founders were at the steed. A few years later you started seeing people exit companies come back around and so they didn't need a$ 1 million round, they needed a 10 million, $ 50 million round. So you're thinking, well, if we're going to own consumer, how can we miss out on the best founders just because they're raising larger funds or larger rounds? So we said we want to expand with our set. The opportunity set is getting wider. The definition of consumer is also expanding, and we're well set up to win there. And so we always think about walking before you run. So each fund was a little bit bigger, and I think it was the second fund was 76, 75 million. The next one was 125, the next one was 250. And so it kind of inched up so that we could show our LPs, here's what we're thinking the market is doing, here's how we're going to play in it, and here's how we're going to leverage our brand and our growing reputation. And as you said, so much of it is about the reputation that you build. And so I would say the second really important thing was our team orientation. There's a lot of VCs out there who are lone wolves. They have their own profile and their own reputation and it's amazing. But we never wanted it to be just like individual GPs that happen to work together. We wanted it to be a Forerunner platform. And so it was team Forerunner in all ways. We really wanted to have it be a situation where any founder could come to Forerunner and be stoked to work with anybody here because there was a certain vibe that you got. And that's how we think about our partnership internally. That's how we think about our partnership with our founders. It feels the same when you get a group of Forerunner founders together and they're all together. I mean, they all have a certain orientation of just being really collaborative and really consumer minded. And so you might have Boomboxes and AI driven very tech heavy opportunity in the music space, but first and foremost, they think about that musician. They are musicians. They have made music before, and so they are the consumer. And I think that's something that really differentiates our group. And then the last thing I would think is just discipline. It's hard to be disciplined when you have a bull market for 12 years. And we probably could have raised the billion dollar fund a lot earlier. We probably could have started doing SPACs. We could have done a lot of different things and we didn't. We said, " Look, we're here to do early stage." The definition of early albeit is a little bit wider than it was like a decade ago, but we're here to do consumer and early stage and the intersection of those two things in every iteration that there could be. So it's not to be limiting, but rather just a point of view and a lens to look at. I mean, I could probably tell you how any company that's in your mind right now. I could consumerize it and make it make sense in our thesis. That's the other thing. If you have new firm managers or fund builders who are listening, people often try to really specialize. And I always say, hey, it's a go- to- market guys. You want to be able to break through the noise just like you do with any consumer, and in this case your consumer's your LP. But over time, if you want to be a successful multi- fund, multi- stage, maybe not some people want to stay early, but multi- fund certainly organization, then you need to be able to grow with the market. And you don't know is, for example, is crypto going to be like you can have a 20- year career in venture just on crypto? Yes, for some people, because some people tried and true are still investing in crypto right now, whereas everybody else is out. And then they're all going to be in at some other point in time in the next few years, and then they're all going to be out, and it's just this crazy wave. And the same with consumer, we're in it all the time every day, whether it's a hot market or a bear market, it doesn't matter. And I think that's the discipline that helps you continue to grow a firm. And as with all things like 10 years feels like a long time, but for a venture firm, you're just getting started. So hopefully, many decades more to come.

Conor: Let's hit that for our last question. I think that feedback loop, it takes 10 years to even know if you got it right and it's just crazy.

Eurie: So true coming from someone in the space.

Conor: So now that you've had 10 years to know whether you got it, what are things like, ooh, yeah, that's something we screwed up at the beginning that now we've changed and we've adjusted? And generally, well, three questions, one, what did you see that you did like, oh, wouldn't do that again. That was a learning? Two, what do you look for when you're trying to pick a new company? What are the kind of core things you're looking for? And then three as just kind of a fun and fun end of show, what's your anti- portfolio? What are the things you're like, yeah, I screwed that one up. I should have put money to that and I didn't? So start with those three and then we'll wrap.

Eurie: Okay. I'm going to give you an unsatisfying answer to the last question about the anti- portfolio because that is one thing when we were talking before the recording started. I was saying like, there's a few things that I don't do that most VCs do, and the anti- portfolio is one of them. Because I've never been a grasses greener kind of person. I always think my grass is the greenest, my baby's the prettiest. So if you've been in this industry long enough, which you're starting to as well, you see that every company, no matter how hot and sexy it is, has massive ups and downs over the decades. And some you think are crazy winners and they go kaput. Some you think are never going to make it, and they suddenly are the darling as it's IPOing, like Il Makiage. And so it's never a winning proposition to think that someone else got it right and you didn't because you just don't know what's happening under the hood. And even a successful company, people don't make money. It feels successful, but under the hood, there's too much preference or the timing of when you invested was at a high and now it's at a low and then you sold and then it's a high again. But you're like, you're not on the high. And so this just takes a long time. And so I would say it's about what journey you want to be on. And this goes back to the other question you had, which is what are you looking for? It's like what journey do you want to be on as an investor, as a team, and who do you want to be on that journey with? And when we think about these earliest stage investment opportunities, it's so humbling because thinking we're going to solve a problem that people don't even know they have yet. Because by the time they start to know about these companies, we will have been in business hopefully for three to five years to get things going, right? Sure, there's early adopters, but it's hard to do research and find this. For example, in our customer research we did last year that I was telling you about, I was asking about biometric trackers like OURA and WHOOP and Apple Health and all of those things. It's a gnat of the average person who knows about it. And yet you've got multi- hundred million dollar businesses here.

Conor: And I'm fairly forward leaning and I had barely heard about OURA ring, and I'm like, this is a space I'm in, let alone my wife and her sister who are very invested in health and had no idea what it was, right? Yeah, absolutely.

Eurie: So what do we look for? We look for, ultimately we start everything thematically. We start with research, we look at the consumer trends on consumer behaviors, and we think, okay, if that is the behavior in this important part of life, whether that's health or finance or personal care, whether that's a physical product or whether that's kind of self- actualization, what is that behavior that we're going to meet at the right time? And is this the founder that understands that nuance intimately? Because you cannot figure it out analytically when it's this early. You have to do it from a personal guttural sense that you are following alongside early adopters because you are one. And that ultimately, that early adopter can proliferate into a mass market because you can't just have it be like this random biohacking thing on the side. It has to get to the average person.

Conor: Can't stay niche, yeah.

Eurie: Exactly. And the Farmer's Dog, I think at the time that I invested, it was like$ 250 a month to buy food for my dog. I love dogs. But even I was like, ooh, I don't really want to spend that much, but could you believe that with enough scale, the price point could come down obviously? Could you believe that at some point in time, you could have a lower price point option obviously? So then what is it that we need to get right, and then making sure that that is what the early stage effort is about, proving that part? And I think as an investment partner, that's what you're trying to help the founder really get a crystallized vision on. And hopefully, they're coming in with that crystal vision, but not everyone has it all flushed out by the time they come here. So you just kind of work on that for the first year or two in the first couple rounds, seed an A to figure that out. And then your other question was, what is something that I've learned in my last 12 years? And I'm like, ooh.

Conor: Like I don't invest in those kinds of companies anymore.

Eurie: You know what? Actually this experience is so timely. Again, it's an occupational hazard or benefit, I don't know, but I love betting on underdogs. I'm the investor that when everyone thinks there's a hot deal, that's definitely the deal I don't want to do. And that's probably not a good thing either because there's a lot of good deals that are pretty hot. But I like finding the things that just look a little bit weird or it's not so obvious. What I will say is hard about that is I think many investors, including myself, invest in what you can see, but it is a fool's errand to think that your investor is going to be the reason why a company succeeds or doesn't succeed. This is all about the founder and the founder's ability to build an exceptional team that can grow over time and see ahead of all of these different corners. And so there was this one company that I just absolutely adore, and I'm going to watch it carefully. But in this moment, I can't invest in the company I see. I need to invest in the company, I think they see. And those are two separate companies right now. So I'm learning myself to say, well, let me then give it another round, because if we start to converge, then I think that'll be a better marriage. But if you get on a team thinking you're going to change the course of that team's perspective, it's not a winning proposition. Sometimes it still works, but it ends up making for a lot of misaligned expectations and frustration over time. So I think you got to back the team you want to back and back what they want to build. And ultimately, those are the ones that in the end, don't take as much of your time. When they win, they win big. You're not the one that's doing all the work. This is not your job. Your job is to invest in a portfolio of companies, not to invest in one company and then be the side CEO or COO.

Conor: I love that articulation of it. I think that I had never thought about it that way because you're like, " Ooh, I love what you're doing. You should do this too." And they're like, " Yeah, but that's not their vision." And I love that. That's so fascinating, never thought about it that way. And it's like, where I see it is not from an investor's perspective for the most part, but from an advising perspective. I'm like helped a lot of companies like, " Oh, hey, this is what I'm doing." I'm like, " Ooh, if just did this. I think this, you'd kill it." And they're like, " Eh." I'm like, " Ugh." Like, " Just trust me," but they don't. And so again, to your point from an investment perspective, it's like you're not going to change who they are, what their vision is for the most part, maybe slightly, but not really. And they can influence, you provide perspective.

Eurie: You want collaborative people around the table. But in those circumstances, I often think, what information do I have that got me to that answer? And instead of giving them that answer, can I give them the information so they can get to it themselves?

Conor: I love that.

Eurie: And it's like parenting. You don't want to do everything for your kid. You got to let them do it themselves. And if you trust that you've backed a good founder and you've got a good kid, maybe it takes five minutes longer, but it's okay. They need to own it. And I think that is a common misconception, I think, over the last 10 years because so much of a lot of the new venture models where we're going to help build the team, we're going to help incubate the idea, we're going to be the founders or be so close to the founders that we're kind of part of the founding team. It's a different model than just the purest venture capitalist. I think that thinking about things from a, there's a portfolio management, a deal management, there's all kinds of things you got to think about as just a pure investor that don't always align with if you're the operator and you just kind of have to be respectful of those different perspectives.

Conor: I love that. Feeding them information concept or providing information, I should say.

Eurie: Yeah, sharing something I learned from my other board. You make of it what you will.

Conor: So I've thought about this a lot. It's like Inception, if you've seen the movie, right? Because when somebody comes to the conclusion themselves, it's just much, much more powerful. And you see that, I mean that comes, that's very, very relevant in fundraising, that's very relevant in sales. It's very relevant in a lot of areas where it's like, I'm going to provide you with all the information to help you come to the decision that I think should happen, but ultimately, you can lead a horse to water. You can't make a drink situation.

Eurie: Exactly.

Conor: But once I come to that conclusion, it's very powerful, right?

Eurie: Exactly.

Conor: Anyways, I've taken up so much of your time. I really appreciate it, and thanks so much. Congrats on all the success of both the fund and the companies that you invest in. You're having a huge impact in the world. We just have 10 other questions we could have gotten into including-

Eurie: I know, I know. It was a great list, by the way. So let's have a coffee and continue with conversation.

Conor: Well, we can do round two. We'll do round two in a couple of years. Check back in.

Eurie: Sounds good.

Conor: All right. Thanks, Eurie.

Eurie: Okay. Bye.

Conor: Bye.

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