Justin McCarthy

👋 Update: I've been friends with (and a big fan of!) Mercury for a few years, and earlier this month I joined as a Venture Partner. I couldn't be more excited for this next chapter - operator turned investor - and to be making the transition alongside this incredible team. I might write more about this at some point, but I thought I'd answer a few questions I've been getting lately 👇 What is a Venture Partner? Turns out that it depends on the firm, and the person. But for me I spend ~75% of my time doing everything a VC does, from sourcing new investment opportunities to supporting portcos. I reserve 25% of my time to advising early-stage B2B SaaS companies on GTM strategy. Why become a VC? I want to help build what's next, but from a different position. I want to apply my operator experience in a meaningful way to support founders and their early teams. And pulling on an Atlassian core value (once an Atlassian, always an Atlassian?), be the change you seek: as an operator few of my BoDs had operating experience, and even fewer (2?) were women - I want to change those dynamics because I know first-hand how valuable it would have been on the other side. Why types of companies do you invest in? Mercury invests in early stage companies across Middle America. While I'm not sure what my core thesis will be, for the time being I'm focusing on what I know best: B2B dev tools, infrastructure, and workplace productivity. Thanks to everyone in the photo below (+ Samantha Lewis, adrian fortino, Jackie Pfister, and so many others) for all of the support these past few weeks, and for humoring me with this impromptu photoshoot!

298

62 Comments

The Apple/Epic beef is tragic (for both companies). Let's count the ways. 1. AAA games are (finally!!) strategic to Apple's go-to-market Apple wants to iterate on Apple Silicon until gamers can't tell the difference between games running on a Playstation and a MacBook, iPhone Pro, Apple TV, and iPad. It also needs a growing library of compelling, immersive experiences for the Vision Pro. AAA game studios like CD PROJEKT RED are using Epic's Unreal Engine to build the next entries in their popular franchises (The Witcher, Cyberpunk 2077). Deep software / hardware support for Epic Games's Unreal Engine would make it cheaper and faster to bring games of that caliber to Apple's entire ecosystem devices... AND offer a path to "spin-offs" specifically designed for the Vision Pro. The Apple/Epic beef makes that level of support unlikely. 2. Apple (finally!) has the beginnings of a compelling value prop to AAA game studios: * Port your titles to Apple Silicon using our DirectX converter * Deliver them across Apple's entire device ecosystem without rewriting a ton of code. But the perception of Apple as a rent-seeking "gatekeeper" hostile to major developers' business models complicates the story. The Apple/Epic beef just reinforces this perception. 3. Epic and Tim Sweeney have a huge vision for immersive gaming and 3D worlds. The Apple Vision is the best hardware to make it so. While the VR / metaverse hype cycle has definitely crashed, immersive gaming and 3D worlds remain highly promising use cases for spatial computers. The Vision Pro has the most powerful hardware and compelling user interface in the category. And Apple has every advantage in hardware and software necessary to keep it that way... Epic's "metaverse" vision would get a huge boost from a positive, mutually-aligned relationship with Apple. What's the opposite of a positive, mutually-aligned relationship with Apple? Beef.

1

Some of the most inspiring founders I've backed take expertise from one field and apply it to another. They're able to create solutions that might not emerge within disciplinary silos. I call these people "missionary misfits.” I'm drawn to these misfits because they tackle big problems without being constrained by the “rules” of individual domains. They combine their deep subject expertise with unbounded curiosity for adjacent disciplines to solve real-world problems. I believe that the most disruptive innovations come from the unconventional remixing of insight and experimentation. That’s why missionary misfits are the apex predators of innovation. These are the ones who initially raise eyebrows yet become study material for future generations. They will transform industries and solve societal problems. And I want to partner with as many as possible.

105

5 Comments

Sharing this primarily for markets outside the top 5 in VC as it's a problem I've experienced as well. One can and sometimes should criticize SV founders who have too much ambition in the way some pursue it, but a super serious problem almost everywhere else is not enough ambition, certainly to include NM. It may surprise some to hear that Seattle lacks ambition given headquarters of Microsoft, Amazon, Costco, Starbucks and others, but that's actually part of the problem--golden handcuffs and conformity, versus hungry and competitive when I grew up in WA in business in the 80s. It's also a problem with many VCs around the country now. They have become so focused on flipping to incumbents their (BT) dominance became a self-fulfilling prophecy. That's not the role of VCs -- if that's their goal they should be a CVC. NM has a similar golden handcuff problem to Seattle, but it's worse in some respects. The national labs pay really well relative to the local cost of living, so it's the career goal of thousands to spend entire careers working for the labs. In both markets the level of early stage funding is so low that it's difficult to leave big tech or labs to join a startup. And in both, the experience of big tech and labs doesn't apply well to startups. Very different world. A related challenge is SV rarely invests outside the region in would-be market leaders--most want to see those remain in CA. So we have a problem for certain, and big disconnect in the market.

6

4 Comments

Over the years I’ve seen the post going around in various forms of how Bessemer Venture Partners keeps a *robust* anti-portfolio on their website. It’s fun, self-aware, humbling, and differentiating. If you haven’t already, go have a look. (As an aside, I’ve been to their offices in Cambridge multiple times back in the day while visiting Kent Bennett, the venerable Felda Hardymon, my dear friend Steve Papa (if Steve was capable of “friendship”), and the young(er) founders of a company called Toast - Bessemer wallpapered their bathrooms with the rejection IRMs of said anti-portfolio). Anyone who has been in the game long enough probably has their own version. Companies they could have invested in, but passed on, only to be made a fool when said company later becomes a decacorn. My personal opinion - and I tend to think one that Bessemer shares - is 1) we all make mistakes, 2) we’re human and at times quite dumb, and 3) hell, at least we had access in the first place. Venture investing is about seeing as many amazing opportunities as you can, even if sometimes that means missing a few…dozen. Either that or I’m totally full of shit and we’re just plain idiots. What do I know. I’ve only been doing this for three years. ¯\_(ツ)_/¯ In any case, in the spirit of giving myself a Father’s Day gift of crow, which I plan to eat, here are some of mine: Toast: not sure if Steve P would have let me into his $4M or whatever it was round never mind the Seed or the A, but I feel like I could have convinced them. Steve F and Aman said they were going to fully rebuild a POS after running into integration nightmares with Micros, Aloha, et al, and I thought they were crazy. Old industry incumbents. Entrenched. Insert foot in mouth, and then pull it out and use it to kick my own ass. Klaviyo: TJ Mahoney was a pre-seed investor and he told me about it. Said AB was a stud. I passed without even talking to them. $8M valuation or around there I think. Shopify ecosystem play? Ew. Sigh. I’m a dumbass. Pillpack: mentored TJ a bit early when he was having some team stuff going on at Techstars. The hippie. $4M post or something. Said no. Whoops. Drizly: Nick Rellas kept stonewalling me, the little twerp, but pretty sure I had a small spot. Pat Kinsel would have got me in. Slept on it. Round closed. I’m an idiot. Draftkings: met Jason at a dinner and Ryan Moore told me to hop in at pre-seed - I already had a small play with a competitor. Jason and I became great friends (which we are to this day). Really knocked that one out of the park. Way to go, Phil! Good eye! Anyway, PLENTY more where that came from and I’m sure I’m currently in the process of creating one of the world’s most epic anti-portfolios at Impellent Ventures. But, again, c’est la vie. Better than sitting on the sidelines and wondering what could have been. At least I know what could have been - a gazillion more dollars than I have right now. Ah well. Batter up! *p.s. I’ve had some winners, too ;)

62

7 Comments

Matt Watson highlights why Origin excels in managing spending, especially after Mint's shutdown. This transition brought a surge of new users, and our product team listened to their needs, leading to key enhancements. Integrating user feedback into our product has streamlined processes and boosted user satisfaction. These features—cash flow breakdowns, credit card bill projections, custom budget categories, subscription tracking, transaction splitting, and equity tracking—show our commitment to continuous improvement and market leadership. These new features are also valuable selling points, demonstrating our innovation and differentiation. Highlighting our AI-driven spending insights will help close deals more effectively. If you are looking for financial wellness solutions please reach out #benefits #financialwellness #humanresources

6

1 Comment

⌛ The deadline for YC’s S24 batch is April 22! I get a ton of requests for application feedback, so I’ve consolidated my advice here: 𝐓𝐞𝐚𝐦 > 𝐢𝐝𝐞𝐚 + 𝐩𝐫𝐨𝐠𝐫𝐞𝐬𝐬 Your idea will change; that’s what it means to be pre-product-market fit. A bet on an early-stage company is a bet on the team to iterate rapidly and figure it out; think of your idea and your progress as useful evidence. Don’t be discouraged if you feel like you haven’t made enough progress, because the amount of progress you’ve made is not nearly as important as how fast you made it. In other words: “slope, not intercept”. 𝐁𝐞 𝐬𝐢𝐦𝐩𝐥𝐞. 𝐁𝐞 𝐝𝐢𝐫𝐞𝐜𝐭. Explain your idea clearly in 1-2 sentences: who are your users and what problem do you solve? Avoid jargon, marketing-speak, technical intricacies, or an exhaustive list of features. Tacking on “...with AI” or “...with blockchain” is not any more helpful than “...with computers”. Bad: “We are transforming the global software development industry with a revolutionary AI platform that streamlines the SDLC for tremendous efficiency gains using cutting-edge LLMs.” Better: “We’re a developer tool that automatically reviews code and fixes bugs.” 𝐊𝐧𝐨𝐰 𝐲𝐨𝐮𝐫 𝐮𝐬𝐞𝐫𝐬 You should feel like an expert on your users, and have some unique/contrarian insights about them. You’ve hopefully identified a “hair-on-fire” pain they have, and you’re building a product to fix their problem. It’s hard to spend too much time talking to your users. Interviewing 50-100 people seems like a good place to start. If you’ve talked to less than, say, 10-20, it might be hard to know you’re solving a real problem. 𝐊𝐧𝐨𝐰 𝐡𝐨𝐰 𝐲𝐨𝐮’𝐫𝐞 𝐠𝐨𝐢𝐧𝐠 𝐭𝐨 𝐦𝐚𝐤𝐞 𝐦𝐨𝐧𝐞𝐲 What’s your path to $1B in revenue? Keep it simple. You don’t need a 5-tier pricing strategy and a multi-year product roadmap, you need to know roughly how many potential customers you have and how much they’re likely to pay (bottom-up analysis), and how big the overall market is (top-down). Reasonable estimates are OK. Remember, the VC model is based on a power law of startup returns, where one huge exit makes up for all other investments going to zero. This makes a tiny chance at becoming a $10B company quite valuable, and a high chance at becoming a $50M company surprisingly useless. 𝐒𝐡𝐨𝐮𝐥𝐝 𝐲𝐨𝐮 𝐚𝐩𝐩𝐥𝐲? Emphatic yes! YC was an awesome experience for us and every YC alumnus I’ve asked so far - it changed the trajectory of our startup. Even if you don’t get in, we found the application process itself was valuable and forced us to think deeply. If you’d like some eyes on your application, send me a message - I’m happy to help!

78

14 Comments

What makes a great COO? After speaking to many COOs at fast-growing companies, I get the sense that their role is a lot more strategic than the title implies. From strategic planning to biz dev, org design, to strategic partnerships just to name a few. Thoughts?

13

Founder friends - if you're thinking about raising this year, Jason's approach is the most genuine and pragmatic one I've come across in a while. He's relaunching the program in a new format - check out the sesh to learn more! ✨ LAUNCH EVENT for Adamant Fundraising I've taken everything we learned working with over 200 founders and helping raise $311M across 3 years of a cohort-based course, and made it better. The new program is called Adamant Fundraising and it is far more accessible than our old cohort-based training. -- Timing - instead of only offering it 3 times a year, we've made it rolling enrollment so you can join at any time of the year. -- Cost - we changed our pricing significantly to make it affordable for the earliest stage founders. -- Community - we've enhanced the community element to make it even more impactful The Event: On Tues, May 28 at 1pm PST, we're hosting a free streaming event to launch Adamant Fundraising and help teach founders what holds them back from fundraising successfully. On top of that, we will be giving away some incredibly valuable gifts to everyone who attends live so make sure to RSVP and hold the time on your calendar. https://lnkd.in/eyHZ_CF7

8

When I reflect on my 8 years at StackCommerce, one of the things I'm most proud of is the incredible company culture we built from the ground up (aka "StackMafia"). It was a huge part of what made the company unique and allowed us to punch above our weight. When it came to hiring, we weren't a "high-flying" startup so we didn't get our pick of Ivy League grads. Instead, we focused on people who: a) had a deep desire to learn/grow b) were humble, friendly, and malleable. Here are a few elements of the StackCommerce culture that made it so special: 1/ Hiring is the first pillar of building the culture you want. Don't expect to change people. Hire for what you want your culture to be. 2/ We worked to make our inexperience a strength by honing in on training for the team. This included hosting a regular "Stack Speaker Series" where we would invite other founders and CEOs to come in for intimate chats. Hearing from experienced entrepreneurs was invaluable. We also offered education stipends that allowed people to take online courses and get certifications from universities like Berkeley for short-term in-person programs. 3/ The "Stack Olympics" were legendary company-wide events. Each year we'd divide into themed teams. It was about as ridiculous as you can get, but the participation level was off the charts so it never felt forced. It bonded us - we all belonged to our goofy tribe. 4/ The quarterly hackathons were another signature part of our culture. These events brought together cross-functional teams to collaborate on a variety of challenges. Some teams would tackle building new apps from scratch in just 24hrs. Others would focus on improving internal processes or systems. It was a chance for the entire company to flex their creativity and problem-solving skills in a fun, high-energy setting. 5/ I was fortunate enough to have an executive coach, and we took that a step further and offered coaching services to the entire team. Investing in people's personal and professional development, regardless of their role, was a big priority. It showed our commitment to helping everyone on the team reach their full potential. 6/ There was no stuffiness or resistance to trying new things. Everyone was all-in on being weird and fun. The team embraced a mindset of openness and a willingness to experiment, whether it was with new company initiatives or just silly team-building activities. There was no sense of people standing around with their hands in their pockets - everyone dove in headfirst. Looking back, I'm so proud of the culture we built at StackCommerce. I see the impact of that culture living on today with so many former StackCommerce teammates going on to found their own successful companies or become leaders at other fast-growing tech firms. That's the kind of lasting impact a strong company culture can have. I'm grateful to have been a part of building something so incredible. Shoutout Stack Mafia!

100

36 Comments

We need a new term for the early employee leaders who are building companies alongside the founders -- aka the folks who are responsible for hiring / managing the team, executing the founders' vision, and setting the tone and culture. I talk about this group a LOT when I describe my work, but it feels like we don't have great shorthand language for this type of person and the work they do. "Manager" falls short because it connotes a specific level in the org and also just feels sorta ick / blah. "Operator" isn't exactly right... it doesn't always resonate with our EPD friends, and can also be used for later-stage work. "Leader" is nice, but you can be a leader in MANY different settings, and being a strong leader sometimes has nothing to do with formal hiring or managing. What are other ppl calling these early-stage startup employees / leaders / managers / operators (ha!)? Do we need to invent a new term to describe ourselves? I'd genuinely love to discuss!

69

11 Comments

Two things I’ve seen the best PMs do really well: 1. Creating hype: They get everyone in the organization excited about any initiative and align xfn teams. 2. Open-mindedness: They don’t get too attached to a specific idea. Instead, they take a step back, view things objectively, and obsessively gather feedback from as many people as possible. Kevin Anderson is one such awesome PM who has a genuine curiosity and infectious passion for Experimentation. I had a fireside chat with Kevin last week hosted by Statsig, where we discussed various topics, including the latest trends in experimentation, build vs. buy, reducing friction, measuring success, and so many insightful anecdotes that you can check out here: https://lnkd.in/gRgi4KDd #productmanagement #experimentation #data

23

2 Comments

I resonate with Kent Beck's insight on why creators often hesitate to release their projects: "By far the dominant reason for not releasing sooner was a reluctance to trade the dream of success for the reality of feedback." The fear of failure or receiving negative feedback can paralyze decision-making. Everyone prefers to be associated with success, not setbacks. Do you find it difficult to trade the dream of success for the reality of feedback? What helps you most in taking risky actions? For me, it's the attitude toward failure—being part of a kind, supportive team that embraces failure as a means to learn.

10

3 Comments

It’s THIS article (the second one in the post below): https://lnkd.in/dEdPxy62

2

Last week I interviewed Blake La Grange, who recently sold Mastering.com and is on to his next adventure Kollege.com. He laid out some brilliant insights including a playbook for creators scaling from $0 to $1m in revenue & more 👇 If you’re an expert creator or entrepreneur in the education space, this might be very useful to you and I would love your perspective, too! Here’s how he’d approach it: 💵 Identify Your High-Value Offer: Start by selecting the most lucrative product or service that requires the least amount of effort to deliver. For instance, if you have extensive experience in sales and partnerships, consider offering a group program with weekly calls tailored for beginner-level professionals, priced at $5,000 per year (or a price that’d be >10% of the value you estimate you can create). 🤝 Leverage Your Network: Tap into your immediate network or audience for initial sales. Reach out to former clients, prospects you couldn't previously accommodate due to budget constraints, colleagues, and connections on platforms like Instagram and LinkedIn. Potentially offer a discounted price for this initial cohort to get feedback and improve the educational experience. 👂Start Small, Listen, and Adapt: Begin with a limited cohort size of no more than 30 people to ensure personalized attention and satisfaction of each student. Over the course of 2 cohorts, actively listen to your audience, identify their top challenges, and offer tailored solutions. Encourage peer-to-peer learning and support within the group. 📋 Streamline Operations: Keep operations simple by utilizing user-friendly tools like Zoom for group calls, Slack for communication, and Stripe for payments. Don’t over complicate things. 📣 Invest in Marketing: With initial revenue of $300,000 (from 2 cohorts of 30 people at $5000 each), allocate a portion towards marketing efforts. Utilize your newfound budget to run targeted ads. Craft a compelling message and refine your landing page based on insights gained from customer interactions. 👩‍🏫 Hire Strategic Support: Be humble enough to keep everything outside of your expertise as simple as possible and hire people as soon as you can outside of your zone of genius. Hire fractional team members to assist with marketing and admin tasks. Delegate responsibilities so you focus on scaling your core offerings and on doing what you love / are great at. 📈 Scale Smartly: With a solid foundation in place, you can slowly scale as you see fit. To get to $1m you’ll need 200 people at $5000, so 4 cohorts at 50 people each. Once you reach that milestone, it’s probably best to hire or partner with others who can help you with facilitation and/or delivery of the cohorts. By following these steps and remaining adaptable, an expert creator can successfully scale their business to $1M within a year. Thanks to Blake for coming on The Expertise Economy podcast - listen to the full episode now: https://lnkd.in/dmFm3RTj

23

2 Comments

If you have a YC interview coming up - reach out and our team of YC Alumni can help set up some mock interviews

16

Hiring is hard enough, but for early-stage startups you have be prepared to pay well and often give up more equity than you want to. Shortchanging strong candidates on money and potential upside isn’t going to get it done. 3 options for early-stage startups to build their technical team: 1) Offer more comp (salary + equity) 2) Hire less experienced but motivated devs 3) Talk with us about how we build nearshore engineering teams for early-stage startups => save on payroll and keep your equity

3

1 Comment

To celebrate Cal.com, Inc.'s newest launch on @ProductHunt today, I sat with Peer Richelsen to discuss how building Platform and Atoms is a full-circle moment + more 🚀 In this ep, we covered:  ✊🏻 Open vs. Closed and why OSS will win 💡 The importance of IP in a post-AI world 🔥 How premium products can be built using OSS 🤑 How to approach enterprise sales as a 1x founder 🙏🏼 The impact of Y Combinator on Peer as a founder PS: I'm a tiny investor in Cal.com and a big believer in Peer and the team! If you are into OSS, support the launch here: https://lnkd.in/e_CaE_KQ Links to the ep 👇🏼 🔗 Apple Podcasts: https://lnkd.in/eBUv5E9q 🔗 Spotify: https://lnkd.in/epngcvFU ❤️ Sponsor Corner ❤️ Big shoutout to acquire.com for making this episode happen! Acquire is the best online marketplace (I can vouch for this) to buy/sell startups, and I know many founders who have sold their businesses there. If you're looking to wind down your business and cash in some of your founder chips, check them out - https://lnkd.in/gM5VZBFC Andrew Gazdecki and the team are always on the hunt to find ways to help more founders through Acquire 🫡 Lastly, if you are a listener and have been enjoying the episodes, please take a minute to drop your rating on the podcast: https://lnkd.in/eaaw-tJk I appreciate you for giving your attention and time 🙏🏼

3

The old adage is true -- if you want to get something done, ask a busy (parent) person. I've noticed those "forced breakpoints" in the day really move the needle when it comes to: 1) Selecting my priorities. Knowing that I have to pickup kids at daycare or school means I have to wisely choose what I'd like to tackle today. The "must dos" get a lot more clear, as does saying no or managing team expectations. 2) Managing energy. Sometimes, it feels like getting to 7:30pm, when the kids are hopping in bed, is a minor miracle (and no way I could do it without my partner, Jackie). I also know my energy levels are not the same after that, so I have to line up the right work with the right energy level. 3) Time boxing work. I can't remember who told this to me, but a task will always fill the time you give it. They meant it in the bad way, where you can waste time on something that can/should be done quickly. The breakpoints for family mean all I have is this time, so push hard to get it done. 80/20 rule typically prevails. I have been surprised at how effective it is to give yourself a much shorter time frame and try to get it done.

5