Sramana Mitra: Where do you see the blitz scale style of the businesses being the most successful? This is acknowledging the fact that you’re not going after that model. You have stated clearly that your firm thesis is more in the capital-efficient, fundamentals, software-driven approach. What point do you have for entrepreneurs to look for opportunities where blitz scaling is a good model?
Rebecca Kaden: I don’t think that’s exactly the framework. Blitz scaling refers to extreme exponential growth. We are focused on that. That’s not synonymous with high capital intensity.
Sramana Mitra: No. If you read the book Reid Hoffman has written, he offers extraordinary amounts of capital as one of the strategies of blitz scaling it.
Rebecca Kaden: It’s one way to scale to grow exponentially fast, but it’s not the only way.
Sramana Mitra: I agree with that.
Rebecca Kaden: I mean it’s not a bad idea. There are different ways to do that. High capital raises is one way. But it’s not the same thing as the only path towards exponential growth. Look at examples like Twitter’s path or Indeed’s path which grew a multi-billion dollar company up to $5 million. I was previously at Zulily before it went public for almost $7 billion for less than $100 million raised in an e-commerce category. Kind of wildly unheard of.
Sramana Mitra: For example, Veeva that’s raised only $4 million and is doing six times – $50 million worth of revenue. They raise other money along the way, but they really needed money. They have great product market fit and that’s really what grew the company.
Rebecca Kaden: We like those businesses where we think there’s some product defensability that’s going to create scale and momentum outside of capital being the only weapon. That being said, you look at a business like Uber or many others. When you’re doing a market by market high-logistics business, capital is the weapon. That’s proved to work. There’s a place for it just as there is a place for product defensability.
Sramana Mitra: Just to elaborate on that, the consumer businesses that we’ve seen really opened up a category in a very new way. Uber and Lyft is definitely a good example. AirBnb is a good example. Amazon is a very good example of a company that needed the capital to do what it wanted to do.
These are good examples of companies where I think the blitz scaling model is a reasonable approach to building a business and changing consumer behavior. It’s an interesting question. Slack, for example, was growing very well on its own. Is it necessary to flush a company like Slack with capital?
Rebecca Kaden: I’m not an investor in Slack. I think you’d have to know a lot more about their internal operations and their plans for growth to be able to answer it. If I didn’t need this money, I would think their opinion was only somewhat objective. So I don’t know. Amazon didn’t raise a lot of money if you equate to what Amazon raised then to what it would be today, it’s a very small amount of money. So they’re an interesting one – that new commerce logistics platform that lends much more towards product defensability and executing in network versus outraising.
Sramana Mitra: Relative to today’s environment, what’s the total amount of capital that Amazon raised?
Rebecca Kaden: I don’t have it on me. We have to look it up. But you Google it, you’ll see it.
Sramana Mitra: I haven’t actually analyzed Amazon. Anyway, it’s actually worth exploring that one. Very interesting conversation.
Rebecca Kaden: I always like a good debate about venture and funding investments. Thank you for having me.
Sramana Mitra: Thank you for coming.