🚀 Issue #59: Earning The Right To Invest
Max Menke digs into his career abroad, starting his third VC fund, the post-demo day gap for startups, and importance of earning the right to invest
💬 Welcome to issue #59 of Between the Lines
Good morning & happy Thursday. Two of the biggest trends in venture capital during recent years have been the rise of ‘Mega-funds’ and the proliferation of ‘micro-VCs.’ We’re tapped out on reading about Tiger and enjoyed Pitchbook’s recent report on the important roles that micro-VCs are playing in start-up ecosystems.
This week, Claremont alumnus Max Menke shares his experience founding a micro-VC fund in GrowthX and how he and his partners seek to solve the post-demo day gap for startups while earning the right to invest.
~ Josh & Miles
👤 Community Spotlight: Max Menke
While at Claremont, Max Menke studied abroad in China, which sparked a love for Asia and entrepreneurship. After graduation, he packed a bag and bought a one-way ticket to Shenzhen, where he started his own tutoring business. From there, he left for Shanghai to first work for an English tutoring startup as the COO and then took on a separate role as a financial advisor for expats. After spending five years in China, Max returned to the tech scene in the Bay to work at Tradecraft before co-founding GrowthX — an early-stage VC fund.
In 2015 you helped start a micro-venture fund as a founding partner — GrowthX. Can you share a bit more about the original thesis and founding story?
When I first came back to the bay area, I found this great program that helped people break into tech. I already had a strong sales background, but I wanted to be diligent about my job search. Funny enough, I actually went into the program to find a job, and they ended up being the ones hiring me. Part of the work that we did there was to help people learn the skills that they would need to be successful in tech. We put them to work for very early-stage startups that needed help, and my specific skill set was helping these startups that were, in almost every case, pre-revenue and trying to find their first customers. I was effectively the head of sales for 6 to 10 startups while simultaneously managing their interns. In doing this over and over again, I was forced to ask, “Okay, how do you systematize this? What are the classic failure points or friction points that we can consistently find in a startup and teach someone else to look for?” After two years, my colleagues, who ended up being my co-founders at GrowthX, and I found very predictable friction points. What we came to realize was that the overwhelming majority of startup failure was not only predictable but incredibly solvable.
Eventually, we put this system to the test. My eventual business partner, Will Bunker (one of the co-founders of what became Match.com), was an investor at another fund at the time. He was looking into a logistics-tech deal and, as a final part of his due diligence process, put me to work finding a market for that company. In just a few days, I had conducted over 200 cold calls with who the founder and I thought were their ideal customers. I was quite literally cold-calling peanut farmers and trying to get them to ship products with us. What we found was that the founder had the wrong market in mind; however, through our process, we also found that the right market was an even better one. That process led to an investment in that company, which was our first investment at GrowthX.
We started GrowthX off with a very simple thesis, which is that every startup has to go to market, few know how to do it, and they improvise it as if no one's done it before. Our belief, still to this day, is that founders will be a lot more successful if they're given a tangible path to market and commercialization that will thrive in the process of VC due diligence. From that, we were able to raise two funds and invest in a lot of companies. When we did that back in 2015, that was an incredibly novel thesis. I still don't know anybody who operates a fund quite as we do. It’s fascinating today that somehow we still have to really loudly beat a drum that VCs should care more about the creation of traction, not just the end result.👇
🚨Claremonster Call-Out: David A. Katz
David A. Katz is a Claremount alumnus and the chief scientific officer and founder of Sparrow Pharmaceuticals — a clinical-stage biopharmaceutical company developing treatments for disorders of corticosteroid excess to spare patients the ravages of steroids. Before founding Sparrow, David was also a pharmaceutical R&D leader at Abbott and AbbVie, where he led clinical development and drug discovery teams and was a personalized medicine pioneer. Last spring, Sparrow secured a $50M Series A from OrbiMed to accelerate the development of its proprietary oral HSD-1 inhibitor, SPI-62, which targets the source of steroids that cause toxicity in key tissues.
In a recent interview with the Health Innovation Matters podcast, David discusses the creation of Sparrow, the company’s work in developing new medicines for patients who have experienced the effects of excess steroids, and how, in his view, developing drugs is just as much of an art as it is a science.
💼 Who’s Hiring?:
CMC alumnus Mollie Amkraut is the co-founder of Crew — an early-stage startup building a career design platform. Their platform provides tools, coaching, and peer connection to help people discover and stay connected to the things that truly matter in their careers. If LinkedIn is your public-facing professional persona, think of Crew and their proprietary Career Canvas as your internal persona that keeps track of all your strengths and achievements. Instead of scrolling job postings and other people’s updates on LinkedIn, you come here to find clarity and confidence in your work. They are currently hiring for a Growth Marketer Generalist and would love to fill the role with a recent Claremont graduate.
Ajay Sridhar, Prashant Fonseka, and Carl Peaslee are Claremont alumni and co-founders of Nifty Cat – a platform that empowers brands to stand out by offering NFTs to their customers with just one click. With NiftyCat, merchants can create NFTs without needing technical expertise and distribute them with a simple URL. This web3 functionality cuts out the complexity around wallets, seed phrases, cryptocurrency, gas fees, and KYC to create excitingly unique experiences for e-commerce. Having worked with thousands of DTC brands in the past, NiftyCat’s founding team profoundly understands data and e-commerce. Check out their openings here if you’re interested in impacting the Web3 space.
Check out the other ~5,000 open jobs at 400+ Claremont-affiliated companies here on our Storyboard. Plus, create a profile and enter your preferences to get alerted to new job postings relevant to you, be they the 1,000+ remote jobs, 100+ internships, or 40+ part-time positions available. We’ve published research that shows that Claremont-founded companies that disproportionately hire Claremont talent outperform — so pay attention, Claremonsters!
If any of these roles catch your eye 👀 , apply and mention Between the Lines. Or, if you are an employer looking to hire tip-top Claremont talent, fill out this form to have your jobs featured.
🗣️ Conversations on the Interwebz:
This week’s top listen 🎧
Claremont alumnus Michael Arrington talks about his journey from founding TechCrunch to Arrington capital. He also digs into the things he looks for in founders and the red flags he looks for when investing in a person or company.
Inc. 2022 Top Private Company Awards….🏆
Arkose Labs helps bankrupt the business model of fraud by creating protection that eliminates bots, secures accounts, and frustrates fraudsters. Claremont graduate Matthew Ford co-founded the company in 2016, and in the last three years, they’ve had 1,480% growth.
Eight years ago, Claremont alumnus Jonathan Simkin founded Swiftly to help cities move more efficiently by helping transit agencies improve their service reliability, passenger information, and operational efficiency. They have recently been named Best Workplace for Innovators and one of the fastest growing private companies by Inc.
Everything else you need to know….📖
For those curious about what types of industries and innovations Web 3 is shaking up, Claremont graduate Iris Nevins shares her thoughts. Nevins is a former engineer at Mailchimp and Vox Media and the current CEO/founder of Web3 community Umba Daima.
Can’t get enough of Between the Lines? Follow and connect with us on Twitter!
🍽️ BTL Snacks:
🦷 The $51.6B Global Oral-Care Market….. With three-year revenue growth of ~300%, Cocofloss, a bootstrapped start-up, continues to prove that there is demand for innovation in the $51.6B global oral-care market. Cocofloss creates eco-conscious, practical, and fun oral care and was recently included in the annual Inc. 5000 list. Former Claremont student and Stanford graduate Catherine Cu co-founded the company over eight years ago with her sister. More on her story here.
⚕️Healthcare’’s Good, Bad, & Ugly….. For NOCD’s third birthday, Stephen Smith, Claremont alumnus and NOCD’s CEO/founder, summarizes what they’ve seen, what they’ve learned, and what they are doing to transform the virtual behavioral health industry. Stephen founded NOCD after feeling frustrated with a lack of treatment resources and support during his OCD recovery. NOCD is now the #1 telehealth provider for treating obsessive-compulsive disorder.
🧬 A Discovery That Changed The World….. The NYT Magazine recently interviewed Claremont alumnus and serial biotech founder Jennifer Doudna to learn her views on CRISPR's potential and ethical issues. Doudna won the Nobel Prize in Chemistry in 2020 for her research on CRISPR gene-editing technology and has since become a leading voice in the conversation about how we might use it. She has also helped found multiple biotech companies, including Mammoth Biosciences.
💼 A New Approach to Hiring A Founding Team….. Hiring the founding engineering team is a crucial yet challenging activity for an early software startup. If you follow the standard hiring process, you’ll gauge technical competency but fail to assess the candidate’s comfort with ambiguity, strong product instincts, and sense of ownership/agency. After early struggles with building the Speakeasy team, they stumbled onto a solution that had been hidden in plain sight. Claremont alumnus and former LiveRamp Director of Engineering Sagar Batchu co-founded the API-Ops platform earlier this year and shares their insights.
Feedback? We love to hear it. Hit us with an email. 👊🏼