Caterina Fake: Co-founder of Yes VC and Flickr – This Week in Startups with Jason Calacanis

Check out the This Week in Startups Episode Page & Show Notes

Watch the episode here

Key Takeaways

  • Check out Caterina’s new podcast – Should This Exist?
  • Invest in and create companies centered around movements in society
  • Try to carefully think through the unintended consequences of your actions
  • This is the first generation of kids to grow up with Instagram
    • Who knows what the long-term effects are of constantly being exposed to the best versions of everybody?
  • The character, personality, and values of the founder(s) play in an important role in shaping the company
  • There’s great freedom in having a job where you go to work, do your job, and then go home (without taking work with you)
    • Those types of jobs own your time, but not your mind

Books Mentioned

Intro

  • Caterina (@Caterina) is the co-founder of Yes VC
    • Previously she has served as Chair of Etsy and co-founder of Flickr
      • Flickr was sold to Yahoo for ~$25 million
  • Caterina is also the host of the new podcast Should This Exist?
  • Check out the Podcast Notes from Caterina’s appearance on The Tim Ferriss Show

Etsy

  • It’s an e-commerce website focused on handmade/ vintage items
  • Reid Hoffman passed on investing
  • Why was it obvious to Caterina that it would work?
    • She sensed the start of the do it yourself movement (the movement of people starting their own craft/maker-related businesses)

Blue Bottle Coffee

  • Caterina is an investor
    • They’ve since sold for $700MM to Nestle
  • “They had unbeatable authenticity. They had a coffee obsessed founder [James Freeman] who had been working at it…toiling…for years”
    • Jason calls this perfect “product-founder fit”
  • Jason says Blue Bottle used to manage the queue at their stores so there was always a line

Catching the Momentum

  • “A lot of what we do with Yes VC is to look for the movements – those things with momentum behind them”
    • In a sense, they look for the trends, and invest in them
    • “All of the most successful investments that I have made – Etsy, Blue Bottle, Cloudera, Kickstarter – all of them were part of some kind of unstoppable movement. When you find that, as an investor…so much of your work is already done for you.”
      • Like:
        • The journalists just waiting to write about the movement/your company
        • Employees who want to work for you
      • “If a company manages to catch that wave, it’s magical”

Should This Exist?

  • This is Caterina’s new podcast
  • The premise:
    • Tech is booming – “We can build anything”
      • “I don’t think the question anymore is, ‘Can this exist?’ but really, ‘Should this exist?'”
  • How will the show work?
    • An entrepreneur building a new piece of tech will discuss it with Caterina and her team
    • Then, commentators will be brought in for a “workshop” with the entrepreneur, discussing all the interesting angles of their tech and the possible unintended consequences
      • This is the central point – Caterina wants these entrepreneurs to think through the unintended consequences of their product/company before they happen
      • “Always be asking yourself, ‘Should this exist and what could possibly go wrong here?'”

The ‘Should This Exist?’ Game

  • Jason brings up the following and asks Caterina if they should exist…
    • Robot soldiers with guns
      • It depends on the context – if they save lives, sure
        • Like in a war fighting terrorists…probably
        • If they’re just on the street…no
      • “Under the right circumstances, yes”
    • CRISPR manipulated babies that remove the gene for Parkinson’s disease
      • (CRISPR is essentially genetic modification)
      • Caterina has a CRISPR episode planned for her podcast
      • “If you’re doing things like removing disease, yes definitely. That’s not a controversial question. It becomes much more controversial if you say something like, “I want to use CRISPR to make my baby X height.'”
  • CRISPR to optimize for 10% more brain capacity
    • It’s tough – we’re going to come to a situation eventually where people will have to decide whether to leave their child as “natural” vs. “genetically optimized” – it’s a personal preference

What does Caterina think of Instagram?

  • The big thing she noticed originally – the filters
    • “This was the beginning of what I call ‘social peacocking'”
  • Flickr had the “average/real version of you”
    • But Instagram – it’s the best possible version of you
  • “This is the first generation of kids that has grown up with most of the imagery they’ve seen in their lives being advertising”
    • People advertise the best version of themselves on Instagram…constantly
      • Who knows what the long-term effects are of this?

The Abraham

  • This is Caterina’s term for how a startup comes to be – it’s their backstory
  • “How something starts, and who starts it…is how it will become”
    • “The character, and the personality, and the values of the people that start that company…whoever it is that starts that company is kind of how it’s modeled after/what it becomes”

Caterina’s Unique Schedule

  • She wakes up every day at 2 AM, works until 5 AM, and then sleeps for 2-3 more hours
    • She does NOT use a computer during this time
  • She talks more about this in these Podcast Notes

Crappy Jobs

  • America has record low unemployment right now
    • “If you want to work right now, you can work…there’s nobody within 50 miles of a city that cannot work. They may not like the job, but there’s work available.” – Jason
  • Caterina has had a slew of jobs in the past – she waited tables, she was a receptionist, and even worked at a dive shop in Arkansas
    • “What I liked about those jobs is that they owned my time, but they didn’t own my mind”
  • “Those kinds of jobs – you go to work, and then you’re done…not like our jobs now. We’re thinking about what we do for a living now…constantly.” – Caterina
    • “Turning it off is so hard” – Jason
    • “There’s actually great freedom in jobs where you come, do your job, and then go home” – Caterina
  • “For those reasons, I don’t think those types of jobs should be thought of as bad jobs that should be eliminated”

What does Caterina think of the anti-billionaire movement going on?

  • “The character of those billionaires matters. What do they do with their power? Getting rich grants you a tremendous amount of power. You’re able to make decisions affecting many lives – people you don’t know and never will meet. That’s an incredible responsibility.”
  • Check out the book – Winners Take All
    • “It’s basically about the sham that is ‘change the world philanthropy'”

The Zebra Movement

  • Check out this piece for the backstory – More Start-Ups Have an Unfamiliar Message for Venture Capitalists: Get Lost
  • Caterina’s Thoughts:
    • “I love the Zebra Movement”
      • “Everybody knows that for every unicorn, 99 companies must die”
        • “This is a tragic loss. A lot of those companies have merit.”
      • “So many beautiful, wonderful products and things that had great possibility and potential were just put to death because the venture model didn’t support them. It seemed as if between going down to your local bank and getting venture capital there was no middle ground.”
    • Most companies in the U.S. are started by women
      • But only 2% of those are venture backed
    • “I think that the entire new community of people, with different businesses, with different agendas, and different value systems….will flourish under a different model”
  • Jason’s adds:
    • There are some more options between venture funding, and getting a bank loan (which no one does)..
      • Equity crowdfunding, bootstrapping
        • “I look for bootstrappers, because I think they’re resourceful. I like to see them go big.”

Random

  • Etsy was the first B corporation to go public
  • Caterina first met Mark Zuckerburg at Il Fornio, a chain restaurant in Palo Alto, for lunch shortly after Facebook moved out of Boston
    • He gave Caterina a business card with the blurb “I’m CEO Bitch” on it
  • Check out this site which lets you see the 1996 version of internet webpages 
  • Check out Zima, which used to be popular in the 90s
    • It was marketed as an alternative to beer and wine
  • Jason is an investor in Cafe X – a robot that makes coffee
  • Caterina is an investor in Sudden Coffee 
    • It’s instant gourmet coffee
  • “What you tolerate is what you are”
    • For example – If you as a social media platform tolerate white supremacy, you’re a white supremacist platform
  • Caterina once put a second mortgage on her apartment to support Flickr
  • Jason recommends the book – Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies by Reid Hoffman

These notes were edited by RoRoPa Editing Services

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