Going against the stream

- an interview with Roy Gottlieb from Cardumen Capital

Roy is an expert at jump-starting a VC career from scratch — it took him only four years to get from an analyst role to a partner position. Despite all this success, he is a humble, insightful person, and an energetic straight talker on top of it. Over the years, I’ve learned a lot from our conversations, which makes me glad I can now share his thoughts on overcoming our inherent bias, the risk of FOMO every VC faces, as well as being grateful for what we have.

Paweł Michalski (PM): As a general partner of a VC fund, what do you consider the most important part of your job?

Roy Gottlieb (RG): Broadly speaking, the answer depends on many things, starting from your ecosystem, the stage at which you invest in, your LPs’ expectations, and more broadly what kind of investor you are — active or passive.

To me, it is important to have a combination of soft and hard skills. I would put additional emphasis on interpersonal skills. Great VCs can identify and attract amazing talent. They can drive people and have the ability to build long-lasting personal relationships based on trust. If entrepreneurs don’t trust you, they won’t come to talk to you. If they don’t talk to you — you won’t know what they are working on or how well they are doing. If you don’t know — you can’t win deals or help your companies.

Finally, I also believe investors should have a strong inner conviction and an ability to go against the stream. It is an extremely critical capability in venture capital investing.

PM: Care to elaborate?

RG: Everyone brings their bias to the table. Let’s say Andreessen Horowitz did a deal — what does that tell you? Does that mean it was necessarily a good one? And if they didn’t do the deal — was the company not good enough? For the most part and unless you speak to them directly, it just tells you that they did or didn’t do the deal. Another example is the on-going question regarding serial entrepreneurs. Is being a serial entrepreneur always better? I’m not so sure.

Many times, in this FOMO-driven industry, investors tend to overweight these proxies. That’s a mistake. Don’t follow others, care to have contrarian views. I’ve made that mistake several times, so I want to believe I know.

PM: Is there any practice that you would recommend to fellow VCs?

RG: First of all, understand the economics of venture capital. It relies heavily on outliers. They are not easy to find, but if you don’t know that you should be looking for them, you might be unpleasantly surprised by the result.

Second, set and communicate expectations clearly. Make sure that you are aligned with other stakeholders: founders, co-investors and LPs.

Finally, bring a ton of humility. Venture capital has the largest concentration of ego per capita in the world. Having seen hundreds, if not thousands of various business plans, we are prone to think that many companies and ideas are rubbish. The people who pitch those ideas bring their passion to us and bet their lives on those ideas. Don’t diminish them. I’m sure a lot of people made fun of Mark Zuckerberg in the past. Think about that every time.

PM: Let’s look back at how your career came to be. What kind of environment did you grow up in, and how did that influence the way you think?

RG: I grew up in a decent neighborhood of a mid-sized city. My family didn’t have any real or meaningful exposure to tech. I took some tech extracurriculars when I was ten. The people I did that with are still my best friends, and we have all gotten pretty far, considering where we came from.

None of us had wealthy parents — although for full transparency I feel like mine were on the higher end of the neighborhood. None had parents in the business world, definitely not VC. This early experience has taught me that if you have the right people with you, you can create a critical mass to achieve something.

PM: What did you do in your twenties?

RG: I wanted to have fun! I wanted to make it big careerwise. I also did not have a clue how to do it. In Israel, you start your twenties by being released from the army. It gives you a unique perspective on many things in life, especially if you’ve experienced any combat action.

While at the military, I was working at the intersection of technology and intelligence. I had the privilege of working with great technologists. We’re talking about people who read binary data as you and I read English. It was a very humbling experience. It gave me a great lesson in understanding the difference between being savvy and being an expert.

I finished my service feeling that I could work in tech, but there’s a ton of people who are way more proficient at it than me. I knew that I wanted to combine various disciplines. I had this somewhat naive idea of combining legal, financial, and tech capabilities, so I decided to go to law school and then business school.

Once I entered the legal sector, I thought leveraging my legal knowledge with tech skills would be great. But lawyers are lawyers; there is not much tech in it. So, I started mapping different areas where you could combine the skills that I had.

I found four different options that made use of the combination: management consulting, investment banking, tech startups, and venture capital. I didn’t want to be an investment banker. I was way too young to have a meaningful position at a tech company. At some point, I thought I would become a consultant. In the end, I decided that venture capital offered the most compelling opportunity for me.

PM: So, what did you do?

RG: I cold-emailed the entire Israeli ecosystem. That was a long shot, I received some responses. One of them was lool Ventures, a Tel-Aviv-based early-stage fund, who told me they were not hiring but would take an analyst at a minimum wage. They didn’t promise anything for the future. I took the job.

I fell in love with venture capital, and that internship was like a honeymoon period. I liked the vibe, the privilege of meeting smart people on a daily basis, and how the partners at lool thought about business in general. I could just sit at the office, observe, and I was happy. I don’t feel like I was shining in my new role, but we eventually extended the internship period shortly.

Still, I started another round of cold-emailing — and LinkedIn messages — to find my next position. One of my messages was to Gonzalo Martinez de Azagra, now my partner at Cardumen Capital. I was lucky because Samsung Ventures was opening an office in Israel and looking for people. Gonzalo told me, relatively early on, that he’s hiring me to work with him, but I should know this: at some point, we are going to do something bigger. And that’s kind of how we opened Cardumen Capital.

PM: Out of all these experiences, which one prepared you the most for your current role?

RG: Nothing, I don’t think I’m ready! (laugh) Nobody cares if you’re ready or not. You need to be there and deliver. I believe every VC is experiencing the imposter syndrome at some point.

Still, I think my time in the army helped. I learned to focus on tough things first.

I also have this vivid memory of the family of my ex-girlfriend, who was wealthy. They owned a publicly-traded company. One day, the company collapsed, and they stopped being rich in an instant. They had a huge villa and ended up living in their storage house, renting out their original home. It was a humbling and mind-opening experience. You should never take anything for granted, not your occupation, not your health. You should also always think positively and keep fighting for tomorrow to be a better day.

PM: What has been your favorite personal win?

RG: It was when I helped hire an R&D VP at one of our companies. I persuaded that person to join it. That person played a crucial role in their development. You see, in a highly competitive talent market, you compete with the Facebooks and Googles of this world. It literally puts a lot of companies in a do-or-die situation when they try to hire the right person for the job.

PM: What’s the one thing, other than financial success, that makes being a VC worth pursuing?

RG: Hearing a “thank you” from entrepreneurs that we helped — not for giving them money, but for being there for them. After all, being an entrepreneur is a lonely path.

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