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Dec. 20, 2021

Micah Rosenbloom, Founder Collective Managing Partner, & Former Brontes COO, on Building & Selling a Company to 3M, Going From COO to VC, Making Investments via Zoom, & Hiring the Right People

Micah Rosenbloom, Founder Collective Managing Partner, & Former Brontes COO, on Building & Selling a Company to 3M, Going From COO to VC, Making Investments via Zoom, & Hiring the Right People

Before Micah Rosenbloom was a venture capitalist, he was the co-founder and COO of Brontes Technologies, which he sold to 3M. Micah and his business partner Eric then went on to found the VC firm, Founder Collective, which has made investments in companies like Uber, ThreadUp, Hotels Tonight, Venmo, PillPack, and more. Micah joins us to discuss deciding who's CEO and COO, not shying away from tough conversations, hiring the right people, founding a VC firm and introducing ops to it, going through a transaction to a major corporation, the downside of making investments via Zoom, and how to identify investors that have true conviction in your company.


Before Micah Rosenbloom was a venture capitalist, he was the co-founder and COO of Brontes Technologies, which he sold to 3M. Micah and his business partner Eric then went on to found the VC firm, Founder Collective, which has made investments in companies like Uber, ThreadUp, Hotels Tonight, Venmo, PillPack, and more. Micah joins us to discuss deciding who's CEO and COO, not shying away from tough conversations, hiring the right people, founding a VC firm and introducing ops to it, going through a transaction to a major corporation, the downside of making investments via Zoom, and how to identify investors that have true conviction in your company.

 

Fred Wilson's post on working multiple jobs: https://avc.com/2021/10/working-multiple-jobs/

Founder Collective: foundercollective.com

Micah Rosenbloom on Twitter: https://twitter.com/micahjay1
Micah Rosenbloom on LinkedIn: https://www.linkedin.com/in/micah-rosenbloom-a0350/

Eric Paley: https://twitter.com/epaley/
Raj De Datta: https://twitter.com/rdedatta
Scott Belsky: https://twitter.com/scottbelsky
Bill Tranchard: https://twitter.com/btrenchard
Chris Dixon: https://twitter.com/cdixon
James Tamplin: https://twitter.com/jamestamplin
Dave Frankel: https://twitter.com/dafrankel

Michael Koenig on LinkedIn: https://linkedin.com/in/mkoenig514 

Michael Koenig on Twitter: https://twitter.com/mkoenig

Transcript

Michael Koenig: [00:00:00] Between Two COO's is a podcast where phenomenal Chief Operating Officers from all sorts of companies come to share their insights, advice, and crazy stories. Hello and welcome to Between Two COO's. I'm your host, Michael Koenig and I'm excited to welcome our guests, Micah Rosenbloom, managing partner at the venture capital firm, Founder Collective.

Micah Rosenbloom:  Hey Mike, thanks for having me.

Michael Koenig: Yeah. Great to have you on. And for those of you that aren't familiar with Founder Collective, they've invested in Uber, ThreadUp, Hotels Tonight, Venmo, PillPack. These guys are the real deal. Prior to Founder Collective Micah, you were the co-founder and COO of Brontes Technology, which is a dental tech company that focuses on real-time 3d scans, uh, which [00:01:00] you actually exited to 3M.

Michael Koenig: So Micah, like I said, thanks, thanks for being here. Very excited to have you on. It's it's worth noting that you're the first guest that we've had that is a current venture capitalist. And I wanted to have you on

Micah Rosenbloom: A dubious distinction, but I'll take it.

Michael Koenig: It's great. I wanted to have you on, in that respect, because it's interesting to hear about your experience in building an exiting Brontes, but also to bring that different perspective to operations as an investor.

Michael Koenig: So. To start with, going back, how'd you end up as COO at Brontes and what was your path?

Micah Rosenbloom: Yeah, so it's kind of an interesting path. Um, I'll share that I was a co-founder of a dotcom during dotcomeboom and bust. And I started that business similarly with four people and we had a conversation around my dining [00:02:00] table in LA, where we started of, okay, who's going to take what job?

Micah Rosenbloom: And, uh, there, I took the president role, which basically meant I was number two to the CEO. Um, but really what it meant was we weren't very good at, you know, delineating titles. And there was too much ego and frankly too much overlap of who did what. And so, you know, fast forward, I went to that company, raised a lot of money and failed.

Micah Rosenbloom: Um, I don't think because I was president, but I certainly, uh, certainly made a bunch of mistakes. We all did. Uh, and some of it was the craziness of the.com era. But after that, I went to business school and most of my second year at business school, I was working on this startup and the startup was Brontes Technologies, which you mentioned, which was based on some technology at MIT.

Micah Rosenbloom: And so we met these, we met a professor and a post-doc and they were working at the time on 3D imaging and trying to figure out how to commercialize. And the professor said to us, I pictured MBAs as aggressive, um, arrogant, but smart business [00:03:00] people. You guys fit the bill. So, uh, you know, let's join. And so, you know, we, we weren't sure it was going to turn into a company, but over the next year or so, we kind of narrowed the different market opportunities to focus.

Micah Rosenbloom: And we ended up striking upon this dental opportunity because we had some connections to Invisalign, which was looking for, um, a way to digitize a dental impression directly from the patient instead of like making, I don't know, Michael, I'm sure you've had this where you put your mouth in a material highly or highly, super uncomfortable.

Micah Rosenbloom: And by the way, it's  inaccurate, it's uncomfortable. It takes forever. Um, it's our first slide of our pitch deck was a picture of the Egyptians making gold crowns for people like in the pyramid days. So it literally is that. Of a process. And so, you know, we, we focused on how do we use technology software and hardware to solve the problem and just take a [00:04:00] scan like you do for so many other things.

Micah Rosenbloom: So, anyway, we kind of went about, we had the same conversation this time, my business partner, Eric Paley and I in a conference room in Harvard Business School and said, okay, we're going to do this, but we both can't be CEO. We had never had the conversation and, uh, Eric, and I, you know, we, we were very transparent about who was good at what, and we, I, if I'm not mistaken, we laid them out on a whiteboard.

Micah Rosenbloom: Cause we usually put everything on a whiteboard. Um, and I think it was pretty clear that Eric should be CEO. He was a way better strategist. He was very good at positioning the company for fundraising and, you know, just had a maturity and, I think it, and frankly, a good sense of where the market was in a way that I think made him the perfect CEO and would ultimately be the right decision.

Micah Rosenbloom: But we also said, we talked about the co-CEO thing, which [00:05:00] by the way, I've, I've invested in and I've seen a lot. We were really against it. I think I had to take a slice of humble pie. Eric said to me, you know, I think you're, you're so good with people and you're good at kind of like operating and managing.

Micah Rosenbloom: And, and I had managed a relatively large company before that. Um, you should be COO. I think I took the weekend to think about it and it was a little bit of a hit to the ego. And then I think I came back with this sense of like, I think it's a good division of responsibility and you know, we agreed that we would consult each other on big decisions, but that ultimately this year decisions would, he would make the final decision.

Micah Rosenbloom: And I have to tell you, I think it was the mature and the right approach. And, um, I, from the next bunch of years on focused on managing, we had a pretty big manufacturing function engineering, although we had a CTO. Um, but, but he would report to me and really just like hiring and keeping the trains running on time.

Micah Rosenbloom: And Eric really [00:06:00] managed the board fundraising and strategy and actually product. Um, I think we'd both iterated on product, but I think he was quite product oriented and, and, um, you know, so I think COO can be a little bit of a catchall, but I think for us, I was the one who had the latest and greatest on how many units would be delivered.

Micah Rosenbloom: When, what features did we think would be, available when, what were the problems? Usually, if there was a real customer issue, and it had been elevated, I would probably, I would take the call. There were a few occasions where we needed the CEO's title, but generally it was like frustrated customer, you know, we're elevating you to Micah and then I'll fast forward.

Micah Rosenbloom: And then let you know, you can ask me any questions, but we sold the company in 2006 and in 2008, Eric left, and I ended up becoming general manager through 2010. So I was [00:07:00] general manager of the division for 3M. So I sorta got back to the CEO role, but it wasn't quite you know, it was within a larger company.

Micah Rosenbloom: And so it was kind of an interesting transition over that, you know, kind of see that whole life cycle. And then ultimately I left the company in 2010 and then the three team, you know, the 3m, you know, organization took it. Yeah.

Michael Koenig: There's so much to unpack there. First off you, you touched on a couple of interesting things that I just want to call out.

Michael Koenig: The first is the learning that you took away from your first dotcom company. And it sounds like this is actually a pretty common mistake, which is around not necessarily delineating the power structure and the roles and responsibilities between the business functions, particularly in the COO and the CEO spot.

Michael Koenig: And I wonder, I've seen this a lot with early stage startups where [00:08:00] it's almost a 50/50 split, right. You each own half of the company, but you haven't necessarily had that tough conversation where you say, "okay, here's, who's actually going to make the final decision." Was that something that you experienced and then do you think that was part of the success in your ability to kind of have that humble pie, and be able to be successful in the COO role?

Micah Rosenbloom: Yeah. It's a great question. I think some people punt the hard conversation down the road. I think a lot of founders do. And partially because there's a little bit of the view that like either this thing is going to be worth something and we'll figure it out then, or it's not, and it doesn't really matter.

Micah Rosenbloom: So why like get all, you know, emotional or, you know, have the difficult conversations now I've also seen. So that's sort of like version one version two I've seen is they make the decision to. Divide the titles. Um, but they haven't really had the hard conversation. Like the titles are part of it, [00:09:00] but there, there actually, isn't a true belief that at the end of the day, the CEO is the CEO that, you know, their CEO and co-founder, or there's two co-founders, um, or their CEO co-founder and president like at our dotcom.

Micah Rosenbloom: But I didn't really internalize that. I think we hadn't really had that hard conversation cause we were both a little bit unwilling to do so. And I think we chose the third and I give Eric a lot of the credit for this of saying like, no, no, no, no. It really, if there is a push comes to shove and I disagree or it's decision will be the final.

Micah Rosenbloom: And I think some of it is personality driven. Like I ultimately, I was okay with that. And I think like, I can be easy going, I guess when I need to be. And not everybody can. And some people just, the ego gets in the way, but we had the hard conversation. I really slept on it and really got comfortable with it.

Micah Rosenbloom: I'm sure you've [00:10:00] seen this too. I would say twice or three times a year of the many companies we deal with either one founder leaves. There's a founder blow up. Or some other, you know, issue that goes back to not having like properly laid this foundation correctly in the beginning, happens all the time.

Micah Rosenbloom: And frankly, the companies that are, you know, that it should have been handled earlier. And I think have gotten to a point where, um, this really could put their successes.

Michael Koenig: It's really interesting. The other part to this that you described, and it sounds like this was part of the success of, of Brontes was the partnership and the relationship between you and Eric, particularly from a delegation of work.

Michael Koenig: But also it sounds like you were complimentary to one another, sort of the yin and yang, which is so vital when you see COO's and CEO's working effectively [00:11:00] together. How did the two of you sort of reach that point? And how did you think about dividing and conquering? You said Eric was a great strategist. He was great at the fundraising elements. There are the other parts, which is it's interesting, the hiring portion that you took on. And then one thing that you didn't talk about was conveying the vision. So when I tend to think about CEOs or have these conversations, it's like three roles: cash in the bank, hiring great people, and communicating the vision.

Michael Koenig: You took on the hiring part. Can you talk a little bit about that?

Micah Rosenbloom:  Yeah, I mean, I think, I don't want to give myself too much credit, because I think Eric and the whole team played a role. I think I was probably the cultural focal point of the company. And I think that's what COO meant. In other words, like wanting the All-Hands meeting, by the way, Eric would [00:12:00] obviously chime in with like, where are we heading in a big picture?

Micah Rosenbloom: And all the functional heads might report on here's what's going on in engineering or customer support or whatever, but you know, kind of like, adding, you know, a certain sense of my sense of humor or, um, you know, the kinds of, um, you know, actually it came from our CTO, but we had a golden bowling ball that we would put on someone's desk.

Micah Rosenbloom: I forget why it got started. I think guys went bowling one day and, uh, we spray painted a bowling ball, but you got the golden bowling ball for doing something special at the company. We had all sorts of you know, traditions that I think make a company special. We were very open culture. Like anyone could get up and somebody in engineering could say, I'm really concerned about sales or vice versa.

Micah Rosenbloom: So I think that's what COO, like the core of what COO. Now that's not always the case, but that's what, that's how we sort of divided. And then I think that translates into hiring. I probably spent at least in the early days, more than half of my time hiring kind of networking within communities of engineers [00:13:00] or salespeople to figure out who the good people were selling the dream over and over again.

Micah Rosenbloom: And, you know, I built rapport with a lot of recruiters, a lot of, in some ways it was a sales function, but I knew if we could get good people, we could get a lot more good people. And so. That I would say probably my single biggest contribution to that company was, was just recruiting. And ultimately we even hired actually a guy from not too far from where you are to run marketing just across the border in Canada, on an island called Bablo island, which is in the Detroit river.

Micah Rosenbloom: It, you wouldn't know it if you'd never been there. Um, but Mike who became our head of marketing. He, he called himself the OG lab guy, dental guy, cause he'd spent his whole career in the dental lab industry. We spent two years trying to recruit him away from traditional. And then when he came on board, it was a real coo.

Micah Rosenbloom: So I think it was like investing a lot in that stuff. And then where it pays off as COO you have [00:14:00] rapport, you know, you've helped recruit the head of marketing or the head of operations or the head of whatever. And some of the team, you just naturally have a bond with those folks. And, you know, they're grateful for you bringing them in.

Micah Rosenbloom:  when Eric left, he became CEO a guy named Rob, who I had worked with at the dotcom. And he was another guy who I literally spent two years trying to recruit. And I think, you know, that was a good use of time. I think the COO role evolves over time.

Micah Rosenbloom: I remember like the first couple of years spending tons of time recruiting, the next couple of years it was similar to today, supply chain issues, customer issues. It did more over time, but a little bit of, you know, kind of the baseball hitter. Who's gotta like go into wherever they need to the slot is a little bit of, you know, my experience this year.

Michael Koenig: If we jump forward [00:15:00] to your time as a venture capitalist, how did you end up making the switch from entrepreneur and operations to the investor side? What was the path?

Micah Rosenbloom: Yeah, and I should say that in between that transition I left the company, 3M, in mid-2010 and it was and similar experiences today.

Micah Rosenbloom: There were a lot of people coming to me saying, help me start a company, help me spin this out of MIT or Harvard or whatever, because I'd been hanging around in Boston for so many years. And, you know, we were a success story when actually there were a lot of failures out of these universities. I mean, you think of these as great universities and they are, they're not particularly commercial they're particularly academic as, as schools would be.

Micah Rosenbloom: And so I helped another company get started and actually it was a real wake up call because. I didn't have Eric. I think I made some strategic mistakes. I think I went into operating mode before we had product market fit. And I think [00:16:00] ultimately that company they did okay. But I think, I think I realized like that the power in the, in the different skillsets and so to transition that company to a founding team, actually the original founder so that I helped them get started.

Micah Rosenbloom: And then the technical founders ran with it and they sold a part of that business, but it was never a big success still running. But Eric had started the idea for Founder Collective on the basis that too many VCs didn't have this real-world experience, didn't have this empathy for what it takes to operate.

Micah Rosenbloom: A lot of these VCs, we pitch where money goes. And they were career investors. They were bad people. They just, they hadn't been in the trenches and didn't appreciate the day to day ups and downs to our, our ups and downs sometimes minute to minute. And so the thesis behind Founder Collective was we're one of these.

Micah Rosenbloom: You [00:17:00] know, we're kind of super angels or we're sort of the angel ethos, but we have more capital. We wear jeans and t-shirts, and you know, we're not, we're also not going to set up in Sandhill Road. Now back then, basically all the VC’s were on one road. They were funny enough. They were at Sandhill Road in Silicon Valley and they were in Winter Street in Boston.

Micah Rosenbloom: I mean, they were literally on the same street and it was hard to get a meet. And I think Eric drove this decision. The name Collective was to imply a more egalitarian kind of, you're part of something you're part of a community, which at the time was really a new idea.

Micah Rosenbloom: It really was less of moving away from the PE style of investing, kind of like, you know, less of what your brother does and more of entrepreneur to entrepreneur, we talked a lot about peer-to-peer investing and in fact, in the early [00:18:00] days, a lot of our original LPs were other entrepreneurs, small checks from, you know, other entrepreneurs, which was kind of unique.

Micah Rosenbloom: So that was sort of the transition. And, some of it was good timing. Oh, and then the other innovation, if you will, on the model was we, we, we created these founder partners. So I started as one of these and the idea. you didn't have to be full time. One of the, and it's funny now you see the extreme of this, where it almost feels like people have four jobs.

Micah Rosenbloom: And Fred Wilson wrote a post about this yesterday. That like maybe the days of like one job, one person, you know, are fleeting and, you know, investors kind of always dabble a little bit. But when we started over a decade ago, we created this founder partner program where you could actually get carry and return from a deal you did, even if you weren't full-time member of the partnership. So Chris Dixon, who’s  obviously at Andreessen now, Bill Tranchard, who's at First Round, Scott Belsky, who's Chief Product Officer at Adobe. We had a great group and there's still a great Raj De [00:19:00] Data today. James Tamplin, Firebase cofounder.

Micah Rosenbloom: These guys were really smart entrepreneurs. Many of whom had been successful or were running successful companies wanted to dabble in investing, but didn't want to do it as full-time job. And we created an economic structure where they could refer deal flow and get compensated for deals we did.

Micah Rosenbloom: We learned a lot along the way. It wasn't as straightforward as maybe I'm making it sound, but it was this idea that venture capital could be changed from investor founder to like a few different flavors.

Michael Koenig: Really interesting if we hop back, I mean, this is the second time that you and Eric are teaming up on the ground floor.

Michael Koenig: Did you have a similar role and responsibility?

Micah Rosenbloom: Yeah, it's a great question. It's a great observation. And Eric and I have now known each other for God knows it's, uh, I won't, I won't say how many years and also our third partner in that. [00:20:00] So we all met in business school in including Chris Dixon in 2001.

Micah Rosenbloom: And Dave was our first angel on Bronte's. So, uh, we, you know, I think that connective tissue is really valuable. So I think when Eric started with Dave Founder Collective, I think some of the cultural stuff that I brought up, you know, frankly, sometimes just a little levity and a little bit of a softer side.

Micah Rosenbloom: Because I think investing can become very transactional and I think trying to add that. And then I think in the early days of Founder Collective, I think I brought some operational discipline. At least I tried. So, you know, more metrics reporting, along with whatever early principles I did okay.

Micah Rosenbloom: Ours, we kind of organized the Monday meeting. I help build up some systems, I've helped [00:21:00] introduce us to some resources that help our Ops team just be more efficient. So we've used a lot of tools. I will say my criticism though is, and I give a lot of credit to Andreessen and some others who have invested in this ,it's very easy and I've fallen into this to go back into just investing in helping the companies.

Micah Rosenbloom: Eric always says, you know, it's very easy to work in the business, not on the business. I think that's very true in venture capital where you just end up on this flywheel. And it's like, especially now the deals, you know, one of my colleagues wants me to meet this company like today or tomorrow. And so a lot of those OKR is, and operational investments we want to make, I think have fallen a little to the wayside.

Micah Rosenbloom: Now. I think we've done a lot for a small team. You know, we have a very robust Airtable system. We have a very robust operating, but do we pay attention to the OKR is as much as we probably should. No. If we were an operating company, I think we would, where I give [00:22:00] to some of these other guys, credit is I think they really are trying to build that stuff.

Micah Rosenbloom: Now, I think it'll be interesting to see the balance between investing and building and operating. But I think that that's kind of what we were trying to espouse 10 years ago in a small way, which is don't just build a bunch of white guys in fancy wood-paneled conference rooms, making investments, but actually try to build an organization.

Micah Rosenbloom: That can improve the way entrepreneurs execute on their businesses. And I think we're actually moving in that direction and I believe they have a COO. But I think it's hard because investing at the end of the day, one check can be the difference between success and failure. Unlike operating, where it's rare that like one move is going to make the difference.

Micah Rosenbloom: It's really chipping away at a problem, investing. You really can get lucky it, you can hit the lottery. It's unlikely, but you can. And so it diminishes a little bit of the COO role, or let me put it another way. It diminishes the perception of [00:23:00] operating. Because the person who's the least operational could make the best investment and make the fund look great.

Micah Rosenbloom: And the team that was working so hard on all these programs for founders and so hard on the tracking system or the databases or whatever, just, you know, never had a great investment in his or her life. And that's the funky challenge of, you know, operating in the investment world.

Michael Koenig: When you're looking at some of the early stage companies that Founder Collective invests in and evaluating those companies, certainly you're looking at the team and basing an assumption here along with the product and the vision. Are you looking at those operational processes so early on or is that sort of a, we'll get there.

Micah Rosenbloom: I do. I think I'm sort of unique in this. Like I think if two people are on that [00:24:00] pitch and one is sort of COO and one is CEO and one speaks to the, I think that some of the success Eric and I had ultimately in fundraising was there was a good yin and yang and people can pick up on it. And so, you know, I look at that, I think a lot of VC's, like a really strong founder, a little bit of the Steve Jobs,

Micah Rosenbloom: Travis Kalanick, who am I missing? You know, maybe Bill Gates. It sounded like Bill probably wasn't just operating, but like the peers, you know, Elon who were kind of like all over everything control everything. And like, there was no one else, you know, it's sort of like one and then everybody else, I like the yin and yang.

Micah Rosenbloom: I think that maybe because of Eric and my experience, I like when I see. By the way, if it's 90, if there's two people on that initial pitch and the CEO is doing 99% of the talking and only that, then the yin and yang may not be there. And then I may get a little more worried about it, but I like when there's a clear kind of [00:25:00] division of responsibilities, in some ways you're getting two for the price of one, you know, you're getting two skillsets.

Micah Rosenbloom: And I think I see a lot of solo founders. We invest in a lot of solo founders. It is hard. It, no matter how good, there aren't that many Elon Musks and, I think I worry sometimes that solo founders, maybe they haven't found their partner, but sometimes I worry that maybe too much ego there and they're not willing to share in the responsibility and they may be more focused on keeping equity in the company, as opposed to let me get enough people on the bus to help me make that equity.

Michael Koenig: So in terms of the companies that you're seeing, that you're talking with, again, getting back to early stage companies you're seeing, it sounds like you're seeing a decent number of COO's already on board. And [00:26:00]my original question was going to be, if you do see COO's that early on or if it's something that tends to happen when companies are a little bit more mature.

Micah Rosenbloom: Yeah. I think 10 years ago people were asking me, what the hell do you do? You know? Why do you have a COO, you're like a five person organization, 10 person organization? Nobody asks that question anymore. You know, I think now whether it's a five person organization or a 50 person organization, like it's an asset, I think.

Micah Rosenbloom: As an early stage, again, getting back to the evaluation, is the COO doing the right things. And do I feel like the COO is, let me put it in another way. Some founders kind of our CEO's, but maybe weak around strategy. So the first question is, is the founder self-aware and hiring to his or her [00:27:00] weaknesses.

Micah Rosenbloom: So I think COO is, can be broadly defined. And if I can think of, I actually think a lot of our CEO's are very operational, but may not be strong in some other area. And so it really, the question is, do they have the person around them? You know, it may be someone who is more financial oriented or someone who's more product oriented.

Micah Rosenbloom: So I think it's a little bit of getting the right pieces of the puzzle as it is to like a one size fits all, kind of early stage if that makes sense.

Michael Koenig: Yeah, absolutely. I want to take a step back and get back to Brontes. You have the unique experience of going through a transaction as a COO. What was that like?

Michael Koenig: And as a co-founder first going through that transaction and then next doing the integration [00:28:00]into a much larger.

Micah Rosenbloom: It was hard. I think. Thank God we had a COO, a CEO, a pretty big management team because in some ways the complexity went way up. There were so many touch points to the organization. There were so many, there was a regulatory department and engineering that we had to plug into and, you know, even analysts that had questions, I think it was huge.

Micah Rosenbloom: And the data room and the amount of scrutiny, you've seen transactions that buyers at least then, and I'm sure. Now, do you know, I just remember like having to spin up reports and investors later stage investors that, you know, what, what's our, you show a curve of usage, you know, all sorts of data that I think it also allowed Eric to stay a little outside of the [00:29:00] minutiae. I think this is true even from investment, but a little bit of it's good if the CEO, and this is the role bankers sometimes play, someone's got to run interference and kind of like deal with the day-to-day stuff, but someone's got to stay focused on selling the big opportunity and, you know, cause it's very easy in the deal process to get bogged down.

Micah Rosenbloom: Well, I don't know their customer service scores aren't great. And the regulatory stuff could come down. Like there's a million reasons to get nervous. And so I think if the CEO can keep the big picture sales motion, enthusiasm, often you're selling the head of corporate dev or head of the business unit, or even a CEO.

Micah Rosenbloom: And it's good to let those people stay together, even if you know exactly everyone knows exactly what's going on. And I think this can be kind of feeding the operating team and saying, what do you need? What do you need? And helping move the transaction and I think that's separation almost of church and [00:30:00] state is a very valuable thing.

Micah Rosenbloom: And in an acquisition, it is largely what the bankers try to do, which is the bankers are keeping, but I think it's even better if you can do it internally than just have a banker, I think both. But, we had hundreds of documents that we had to get together. And I think I spent a lot of time with our head of finance and with our head of engineering and customer making sure we were really buttoned up on that.

Michael Koenig: What about the day-to-day? If you're the COO and you're working a lot on the transaction, how are you at the same time doing the entirely other job that you have to do from day in and day out to make sure that the trains are still running on time? How'd you manage that?

Micah Rosenbloom: It's another one, thank God, there was a CEO and COO because in the early days, almost for the, I mean, these transactions can take.

Micah Rosenbloom: I mean, we had all these suits come in from 3M [00:31:00] and we couldn't tell anybody, you know, we had to kind of disguise the whole process and sort of make sure nobody was suspicious. And that was tricky. Fortunately, our conference room, the main conference room was a bit away from the rest of it, but I'm sure people suspected.

Micah Rosenbloom: So I think in the early days of the transaction, Eric focused on is this a deal that's going to have, like, let's get to some broad strokes understanding of what a deal would look like. And then as it got closer, I got more involved. But I think to your point in the early days, I had to keep the guys focused on running the business and Eric, you know, worried about the deal and whether a deal was getting, because frankly you don't know. And you know, you may end up operating the business for another few years, so you do have to keep the trains running on time. So I think we really benefited from kind of that, you know, two headed monster throughout most of the transaction.

Micah Rosenbloom: I think, you know, another interesting thread on all this, is that this may not be where you [00:32:00] want to go, but I'll say it. And then we can put a pin. It's very interesting. Being an operator once a big company comes in because I think one of the mistakes I made was in some ways, I think we lost our scrappiness and being an operator with tons of resources.

Micah Rosenbloom: And I think I've learned this with startups too, was, we built out this massive training center and I spent tons of time ordering equipment and building this beautiful thing and 3M wanted us to do that. They wanted the show piece. We were in Boston and we had the space for it.

Micah Rosenbloom: But in retrospect, did we need this five chaired, beautiful, shiny dental show piece with flat screens everywhere. We had five, $700,000 3D printer on display. You know, I just think back to like, even the time it took to put that together, you wanted done that as a startup and I can think of other things.

Micah Rosenbloom: We launched an orthodontic product quickly because we [00:33:00] could, I think as COO, your resource gatherer and then you get all the resources and I think you lose that frugality may have gotten you there, but I suppose that's as much about startups going to big companies as it is the COO journey.

Michael Koenig: I had a saying at Automatic, um, we ain't Google, so let's be frugal.

Micah Rosenbloom: I love that. And then I might use that.

Michael Koenig: Yeah go for it. Uh, we'll have to give, uh, maybe in the show notes, some credit to, uh, to the person in our finance department who came up with that. And it's something that Amazon really likes to do as well, doing things without a lot of resources to maintain some of that frugality throughout the business. So it's interesting to hear about, okay, once you do get resources and the reason I'm kind of going into this a little bit is once you do get those resources, how do you continue to make good [00:34:00] decisions? And I think the reason why I'm asking this particularly on the venture capital side is these rounds are just enormous at this point, and you get that cash, and then how do you help a founder stay focused and disciplined from a financial perspective?

Micah Rosenbloom: It's so hard, right? Like even thinking in your own life where, you know, I'm speaking of Amazon, I feel this every day, it's like that, that 10 or $15 purchase just no longer seems like a big deal.

Micah Rosenbloom: And, you know, in the scheme of things, it isn't, but it's the slippery slope of, and then you extend it to a conglomerate that, I forgot what they do, but you know, $20 billion in sales a year and has 60,000 employees. And they're like, yeah, just, I mean, you know, it's not frugal, it's not like without any oversight, but,

Micah Rosenbloom: you know, someone can sign off on a half million dollar purchase and you're like, all right, like it's not gonna change anything, [00:35:00] but the mindset shifts, you know? And so, yeah, I think these heavily funded startups are going to lose that. Because I do think if you, if you just have the resources, you know, I remember our CFO, our head of finance, he was always like, I'm always the no guy and I'm like, I need you to be the no guy.

Micah Rosenbloom: But it's hard to be the no guy. And at some point it's like, Hey, can I go to that conference for 2000 bucks? And, you know, we haven't been going a lot of conferences, but we will and spend the money on travel and, it's like, well, do you really need to go? Yes, it's a really important, okay, fine, go to the conference. And then the next year three people want to go to the conference and then the next year 20 people want to go to the conference and it's the tyranny of incrementalism, but it happens all the time. And I think it's really hard when you have the resources to stop it.

Michael Koenig: You mentioned something from an [00:36:00] operating perspective that you, as a venture capitalist are going to start traveling again. So y'all, aren't sticking to Zoom for the foreseeable future?

Micah Rosenbloom: It keeps you off the road. It keeps you off the road, what you don't get and I think this is related to the top. I think you walk into someone's office, even if it's five people around laptops and you get a feel for something.

Micah Rosenbloom: I remember you just get a feel for the vibe. I remember God, I walked into, I mean, I can think of many, many examples of walked into some guy's apartment, the three founders, and I was like, boy, these guys live together. They eat together. But they are determined to make this thing successful, like there. And then, like, I think this woman walked out of the room and I was like, who's that?

Micah Rosenbloom: And he's like, oh yeah, my wife lives with us too. Like, I was like all in. I mean, they are all in. I also had a colleague who got back from visiting a startup that we were looking at. I said, I don't even think this was a real office. Like the [00:37:00] laptops were barely plugged in. I was like, that's worrisome. He's like, yeah, it just didn't feel right.

Micah Rosenbloom: It didn't feel like that's reason enough. So, I think visiting, and sometimes it's like meeting someone in a coffee shop and just looking at my, I think we're going to go back to some amount of that, especially at the early stage. Will it go completely back? I think a lot of first meetings will happen over Zoom, but I think even if I just look at the geographic distribution of our investments, that has changed dramatically, a couple of new UK, a couple of, we did one in Chicago, one in the Twin Cities, Portland, Oregon, one in Transylvania. I have no idea where exactly Transylvania is. Um, I mean, it's really quite broad these days.

Michael Koenig: I think Dan Primack missed that in Pro Rata in his newsletter, the Transylvanian funding that certainly would have

Micah Rosenbloom: I'm sure once they do their Series A well, I [00:38:00] mean, yeah.

Micah Rosenbloom: And we're seeing, you know, obviously engineering teams all over the place and that that's, I mean, the world is really flattening now, more so than.

Michael Koenig: One of the last questions that I, I always ask, which is as a COO, we've all had those moments where we, we experienced the problem that pops up each day and it's kind of the, "well, never thought I'd see that."

Michael Koenig: Would it be safe to assume that you as a VC have similar experiences and if that is true, is there one that comes to mind that you could share?

Micah Rosenbloom: Oh, I mean, we, we had them all the time. I mean, we were about to hire someone. We had been recruiting for a long time. I mean, I could go on and on. He said, you know, he was going to be demoing the product constantly.

Micah Rosenbloom: He was sort of a, not customer support, but like customer success leader in your organization and demonstrator of the product and travel a lot. And he said, guys, there's something about the product that whenever I demo it and I look [00:39:00] back and forth at the screen and using it, I get nervous and nauseous.

Micah Rosenbloom: There may have been other life events that were playing into that, but I can't take the job. And, and that was a relocation. I had a few of those, but that one was specifically, one of the funnier ones was, in the early days we were struggling because we had to test the product on somebody's mouth.

Micah Rosenbloom: We didn't want to take, and we didn't want any liability. I was always the test subject. So for hours on end, nights and weekends, and even during the day, I would be backing up. We're used eBay bought chair, dental chair with my mouth as wide open, as a golden retriever with a device like this big, and it would be dripping and it would be hot.

Micah Rosenbloom: And it was like, very prototype and, we were struggling. A lot of the teeth don't have texture and the way the algorithms work they would correlate points, recognizable points and stitch the [00:40:00] image together. But on the flats of teeth, it's very, there isn't a lot of texture, not like your cusps.

Micah Rosenbloom: So we sprayed a little something on there to kind of give it some texture. And, at first we like put this like carbon stuff together and it's "guys, I can't get it off." I'm like scraping my teeth. And I'm like this stuff isn't, you know, it was like almost nail polish. It was similar. And I, so for like 20-15 minutes, I'm sitting there like grinding you like, so the things we'll do for our companies.

Michael Koenig: That's a good one for sure. And you must have plenty of night guards from all of your, eh,

Micah Rosenbloom: That's true. I have a lot of night guards and weight and so forth. I should use them.

Michael Koenig: There you go. Last question, for COO's going into an early stage venture back company, what [00:41:00] advice would you give them in their approach to partnering, not only with their early team, but also with the investors that they brought on board?

Micah Rosenbloom: I think operational empathy and a real, you know, does this person understand what I'm building and what it's going to take, I think is, is what entrepreneurs should look for. I think there's this funny thing happening in the market right now, which people are confusing speed with conviction.

Micah Rosenbloom: So if I say to you, Michael, I love what you're doing. I want to write you a check now. And there were people doing that because they're so eager to invest and so eager to get ahead of the next investor. You take it as a signal of, "Micah must really believe," but, and then the next investor comes along and says, Michael, show me some of the data on the product.

Micah Rosenbloom: Let's meet again, next week. Let's go to a coffee shop outdoors and have a conversation. [00:42:00]And you're like, I don't know if this person believes. I think people mistake that that second person is a non-believer and therefore an inferior investor. When I would argue the person that's digging in more is more likely to have conviction when they write the check and probably more likely to understand and help the business.

Micah Rosenbloom: Then the person who is so flippantly, right. See early Jack. But I understand why entrepreneurs are attracted to that first investor. And I think that's the struggle. Do you want to hear the hard questions? Does the investor ask the hard questions, a good investor of an investor? I would suggest good investor, but not everyone wants to hear it.

Michael Koenig: Absolutely. So be wary of those first checks, but, but don't turn them down necessarily.

Micah Rosenbloom: Yeah, well I think, and not everyone has a choice and I think be weary of the person who scrutinizing the spreadsheet for numbers that don't matter. But I think there's a fine line between. [00:43:00] They're making a bet and they're a partner, and I think you want people who are partners, especially in the early days later on.

Micah Rosenbloom: Maybe you can have people making bets that's the stock market is essentially that I have no say about Apple's new computers, but I'm a shareholder and I'm making a bet that they're going to do great things. But in the early days, like I think the investors matter and I think the investors can help or harm the company.

Micah Rosenbloom: And I think you want investors who will help and I think sometimes that those investors are the harder ones to sell.

Michael Koenig: It makes a lot of sense. Well, there you have it folks, Micah Rosenbloom from Founder Collective. Thanks so much for coming on the podcast. What's the best way for people to keep up with you and what Founder Collective are up to?

Micah Rosenbloom: You can find me on Twitter at micahj1, our website, foundercollective.com. And you can always message me on any of the [00:44:00] platforms and look forward to hearing from everyone.

Michael Koenig: Thanks for listening to Between Two COO's. I'm your host, Michael Koenig, and a very special thank you to our guest Micah Rosenbloom, managing partner at Founder Collective, for joining us. Tune in next time for our next COO chat on Between Two COO's, and be sure to subscribe on Apple Podcasts, Spotify, or wherever you listen to podcasts, so you never miss an episode. Just visit betweentwocoos.com. And if you have a minute, please leave us a review on Apple Podcasts and tell others about the show so they can get great advice from phenomenal COO's. Thanks, and until next time, so long.

Micah Rosenbloom Profile Photo

Micah Rosenbloom

Managing Partner

Before Micah Rosenbloom was a venture capitalist, he was the co-founder and COO of Brontes Technologies, which he sold to 3M. Micah and his business partner Eric then went on to found the VC firm, Founder Collective, which has made investments in companies like Uber, ThreadUp, Hotels Tonight, Venmo, PillPack, and more.

Micah joins us to discuss deciding who's CEO and COO, not shying away from tough conversations, hiring the right people, founding a VC firm and introducing ops to it, going through a transaction to a major corporation, the downside of making investments via Zoom, and how to identify investors that have true conviction in your company.