Giant Robots Smashing Into Other Giant Robots

464: IVP with Zack Willis and Eric Liaw

March 2nd, 2023

Eric Liaw and Zack Willis are part of IVP, a leading venture firm with a 43-year history of partnering with entrepreneurs who are undaunted on the path to innovation.

Will talks to Eric and Zack about what has made IVP so long-lasting in the Venture Capital industry, how they help companies' portfolios, and the accomplishments they are most proud of.

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WILL: This is the Giant Robots Smashing Into Other Giant Robots Podcast, where we explore the design, development, and business of great products. I'm your host, Will Larry. And with me today is Eric Liaw and Zack Willis, who are part of IVP, a leading venture firm with a 43-year history of partnering with entrepreneurs who are undaunted on the path to innovation. Zack, Eric, thank you for joining me.

ERIC: Thanks, Will. It's great to be here, really appreciate it. And I got to say, as the Giant Robot Podcast, as a kid growing up, Transformers were my favorite toys. So this may be the closest I ever get to being a Transformer by being part of Giant Robots, so thank you for the opportunity.


WILL: Love it. We love robots here, so it's perfect. All right, let's start here. For folks who may not know, tell us about IVP and what's on deck for 2023.

ERIC: Well, you gave a great intro, so let me just add to that a little bit. You know, we're really proud of our history and our firm. We've been around since 1980. So we're one of the sort of original Silicon Valley venture firms. But when I speak about the firm in that context, I don't think it does justice to how the firm has expanded over the years and how our investment activity now encompasses not only the Bay Area but major U.S. markets like New York and LA. We have investments in Canada, Australia, and a number in Western and Central Europe as well.

And the common theme for us is that we're focused on working with entrepreneurs who, as you pointed out, are undaunted as they innovate and are pursuing dreams to create companies that will become recognizable in households and companies across the world, not just today but tomorrow as well. So that's really what IVP is all about. And it's what we're looking forward to in 2023 despite obviously the fact that the world is a little more challenging these days, a little bit more uncertain in, particular in the venture category.

But we're really excited about the things that we're working on. We invested a lot in our team over a number of years. And, believe it or not, despite what you might read in headlines around venture activity, we are very much open for business in 2023 because we think that great entrepreneurs and great ideas come together at all times, regardless of whether the stock market is up or down. And our job is to find them, work with them, and become partners for three, four, or five, six, seven years, sometimes longer than that. So really, there's no bad time to start a company and get to know venture investors like us.

WILL: Yeah, definitely. Your company has been around for 43 years. Can you kind of tell me what has made you last that long, for 43 years? That's a long time to be in the venture capitalist world, especially before it was popular and fun.

ERIC: You know, it's a great question. I've been at the firm for 11 years now. So a lot of the credit goes to people that...our founder, Reid Dennis, who started the firm. He's in his 90s now, so he has since retired, but a lot of credit goes to people that came before me and before Zack. And I think that's a common theme for any kind of organization or institution, no pun intended, because that's what the I in IVP stands for. But it goes to that sort of common thread. You have to evolve, especially in technology.

The technology markets that were successful for IVP in the early '80s that's not really cutting-edge venture anymore. As an example, Seagate was one of our first investments ever when people weren't sure that personal hard drive technology would actually work or whether or not they're getting market demand. I mean, who would actually want storage themselves carried around with them at all times? And now, think about how much storage you have in your pocket. It's pretty gnarly to think about how much technology has advanced.

But if you kept only thinking about, okay, I'm going to invest in the next hard drive, you would have really gotten stuck after that. And obviously, the things that have come since out of the minds of technology entrepreneurs have far exceeded what people at the time of the founding of IVP would have thought was possible. So I think that evolution is really important, staying fresh; technology trends evolve. In the early days of IVP and in Silicon Valley, there was a saying among venture capitalists that if you couldn't drive to the board meeting within 30 minutes, you didn't make the investment. That's just not true anymore. There's no way.

WILL: [laughs]

ERIC: And I think COVID has certainly proved that because investments are being made around the world. Now, maybe in hindsight, that was too fast. There was too much capital flowing around just to resume dating if you will. But the underlying theme is evolution, and I think it's teamwork. Because our founder, Reid, wanted the organization and firm to thrive well beyond his days as an active investor, and you can only do that with building a team that's multigenerational. And I'm proud and lucky to be part of an organization that's done that.

WILL: Awesome, awesome. Well, tell me about you. Tell me more about your background. How did you get started in the VC world?

ERIC: You know, child of immigrants who came to the United States in the '70s from Taiwan. They met in New York City. Like many other people, moved to the burbs and they started a family. So I was born in New Jersey. My brother and I were both born there. I moved to LA when I was 12. I lived in Southern California until I went to college. Had the miraculous fortune to somehow get into Stanford and went to school sort of in the late '90s into the early 2000s, as good fortune would have it, in the middle of the internet bubble.

So I had kind of a front-row seat to that era of technology, innovation not knowing anything about tech when I showed up in Palo Alto in the fall of '96. I got exposed to venture capital while I was in school. There was a pretty memorable, at least for me, speech that I went to. John Doerr, now retired from Kleiner Perkins, was on stage in the engineering auditorium and gave a speech about how Amazon was going to change the world. And this was probably in the fall of '98.

And he was right. I just think maybe the timeframe was slightly off, but he was right. I mean, at the time, it was books and CDs, and to some of our listeners, CDs was actually how you used to listen to music.

WILL: [laughs]

ERIC: But you sort of had this really expansive vision. And it was a really exciting way to understand that there are ways to be involved in the technology ecosystem without necessarily being a software engineer. Because I tried my hand at that, and I wasn't anywhere close to being top of the class, let's put it that way. And so, I wanted to be involved in the industry but also kind of think about how I could play to whatever strengths I had.

And then the sort of window into venture capital sort of started to open in terms of my awareness of it. I ended up working at Morgan Stanley for a couple of years out of college, where I got to learn more about technology from a business lens. But I always knew I had an angle or a desire to become a venture capitalist. So got into the industry; it'll be 20 years ago this summer. And I've been fortunate enough to keep doing it for that period of time. So that's kind of the medium-length answer to how I got started [laughs] in the business.

ZACK: I don't have quite the story that Eric does there. [laughs] But venture capital was never on my radar. I went to college to be a programmer, and that's where I started out. My first real job was at Anheuser-Busch in Los Angeles, and go Lakers.

WILL: [laughs]

ZACK: Me and Eric have some LA routes [laughter], so that was a great job. I had a ton of fun. And I just got a call from a recruiter one day that a VC firm was looking for a job as an IT manager. I was very unqualified for the position, went through the interview process. It took like six months. I think I met everybody at the firm, got the job. And that was, like Eric, that was about 20 years ago now. And I have just been in the industry ever since. So it's a great place to be, and I have no plans on leaving.

WILL: Oh, that's amazing. I love it. So tell me this, beyond dollars invested...because honestly, when I think of venture capitalists, it is mostly about the money. Hey, how much money have you done? How much money have you sent in? What does that look like? But I don't think we ever cover the next step. What else is there? So beyond dollars, what does IVP do to help companies' portfolio?

ERIC: Capital is definitely part of it. It's venture capital, so let's be real. You can't ignore that part of it. But I do think that it is only a part of it because what I think sometimes people don't really think through...because the media in particular likes to write about the day a company goes public or if there's a big acquisition like it all just happened at that one moment, but that is so far from the truth.

I mean, the amount of work that entrepreneurs and people at startups put in to drive to those outcomes that sort of culminate in that moment is really one of the things I respect most and enjoy most to be part of as a venture capitalist. And so what our role in that can often be is actually quite varied because no two companies are the same. I mean, there are some common themes, but no two companies are the same. And so how we try and get involved is tailored to what a given company needs at a given point in time.

Now, some of the common threads might be working with companies to help build out their teams. We do a lot of that because, ultimately, the team is who's at a company every day. I mean, investors aren't there every day and frankly, if we are, probably something's gone wrong.

WILL: [laughs]

ERIC: That team is important. And we like to think about getting involved in high-leverage moments. And there are a number of different ones, and Zack is part of this too. So a high-leverage hire is probably someone at the C-level or VP-level because that person then recruits and builds out a team. It's different...not to say that individual contributors aren't also important, but we're trying to think about those key players, moments where we can help, I guess, in a biblical turn, teach people how to fish instead of fish for them. That's our mentality, and recruiting is part of it.

Sometimes these are partnerships that can drive significant revenue lines. Sometimes it's debating what a business model should be in a given company. A great example on some of these is at both Coinbase and Discord; there was debate around what the business models ought to look like. Coinbase is very transactional. We pushed them to sort of think through a recurring revenue component, some other services that they could have so that their revenue could be a little smoother and not just dependent on transaction volumes.

At Discord, they were thinking through raising money to start an in-house gaming studio. We kind of said, "You know, that's a really competitive industry, and the content creation costs just keep going up. How about a different model? Maybe we can think about a subscription service." And that became what drives the revenue today around buying advanced features for your private servers and things like that.

There are a lot of moments...unfortunately, sometimes our companies become targets of bad actors, which brings Zack back to the forefront. Part of the benefit of having a portfolio is we see a lot of these different incidents. And Zack is someone that we sort of unleash with our companies when they face some of these challenges, you know, I got a hack, or I have this going on, and Zack jumps in. You should talk about some of the situations that you've had to deal with. And the bat phone rings when those things happen, and we send them straight to Zack.

WILL: [laughs]

ZACK: Yeah, I mean, we definitely do everything we can. There definitely have been times where it's, all right; this happened to us; what do we do? How can we help this company? And I've really been deeply involved in security most of my career, and it's kind of where I wanted to go. And I pride myself on that. And we have great security here, and we try to instill the same in our portfolio companies.

And recently, we developed these jump guides, which is another way we're helping portfolio companies. So they're kind of like how-to lists. So there would be how to hire your first CFO, how to go IPO, that sort of stuff, and I just authored a couple, actually, that are about how to keep your company safe and how to keep your employees safe. And it's all just tips. It's nothing revolutionary, mind-blowing, but it's just stuff that every company should be doing to keep themselves safe.

And so that's really the message that we try to give to our portfolio companies. We definitely internalize it as well. I think really the key to good security is there's a partnership. There has to be a partnership between you with, the security team, and all the employees. You can have all the layers of defense you want. You can have your firewalls, your antivirus, et cetera, but if your employees don't understand the value of security and why they shouldn't click on that link or they shouldn't download that file, it's meaningless.

It's very important to instill that, just have open communication. And what I tell everybody at IVP is that security is in your hands. We're doing what we can, but it's in your hands. So, ultimately, it falls on them. And it's a scary time, you know, new stuff coming out all the time. But, yeah, we do our best to keep on top of it and our portfolio companies as well.

ERIC: Zack is being very modest. But if you take a step back, if you think about, you know, in any of our own lives, which there's a parallel, I think for companies, there are certain moments when you're facing a tough spot, and people that were there for you and helped you are the ones that are most memorable. And when there are good days, things are pretty easy. And those hard days are where we want to make sure that we're there for our companies.

And some of those hard days are in times like these where companies have to make some tough decisions around their cost structure because the environment has changed; some of these are, as Zack points out when they're facing a hack or a breach of some sort. And so, ideally, some of those you're preventing before they happen. But in the moment, Zack is a great ally and asset for a lot of our companies.

And some of these also happen on a day-to-day basis. It works great to have someone like Zack on our team. He can kick around and be a source for feedback for some product testing, which he does with a lot of companies that are in the portfolio. And actually, he does that when we're evaluating companies too, and sometimes they don't score so well on the Zack Willis meter. [laughter] And then we have productive feedback to give them to think about things as they refine what they're working on.

So it's one of those things where there are high-leverage moments, but we really focus on trying to be involved but also available. And again, this is repetitive to what I said earlier; no two companies are the same. And these are long-term partnerships. We want to make sure that we help them succeed, and that's what it's about.

ZACK: I agree, and availability for sure. It can be around the clock. You don't know when these things are going to happen. And definitely, we pride ourselves on that, on being available for our companies when they need us.

WILL: That's amazing. It sounds like maybe the secret sauce is your long-term relationship with the company. It's not just drop millions of dollars into the company and see you later. Hopefully, you sell out; whatever, you make money. We'll get it back. It's not the day-to-day, but when it gets hard when we can help you when we can support you.

And we kind of have that same mindset with thoughtbot. We don't just try to build software and say, "Hey, you're on your way." But, no, hey, can we help you hire developers, anyone to help you with this and make sure that it's not going to fall off as soon as we leave? But that long-term thing. So sometimes, when you're in a long-term game, it can get kind of messy. So, professionally speaking, what keeps you up at night?

ERIC: One of the challenges of being an investor is that you can never be too happy or too sad, particularly when we have a portfolio. So if you think about it, to your point about being involved, it's not just writing a check or investing and then say, "Here's the money; call me later." We're active partners. We take board seats in two-thirds of the companies that we invest in. And that's not a stat I throw out there to say it's a contest to see how many boards you're on. No, it's actually a reflection that when you're on a board, you have a responsibility to be helpful and involved and help steward the entire company on behalf of all shareholders.

And so that's part of being involved in a portfolio of 80 or 100 companies that are active right now. There are going to be some that are having good quarters and some that are having tougher quarters. And so, collectively, we try and be even-keeled as long as we're making forward progress. And Zack is a guy who runs sub three-hour marathons, but some miles are harder than others. And he can talk more about that. But there are going to be some periods in a company's journey that are harder than others.

And so we just try and make sure we're sort of focused in the right direction and ultimately that the right goal is in mind. And right now, probably what's topical is it's harder for companies to raise money at any scale. You see, this sort of capital markets have really reversed course, and this is by design with the Fed raising rates and trying to intentionally slow the economy down for a whole host of reasons we probably don't have to get into on this podcast, but it's working.

And what does that mean for our companies? It's harder to generate revenue. People are watching their budgets, whether they're consumers or enterprises, which then means that they need to watch their operating budgets. And that's why you've seen a lot of the layoffs that have happened across the technology sector, in particular over the last nine months. And it's not just startups, you know, it's Google announcing one of the biggest cuts that they've ever had in their history. Microsoft did that yesterday.

So it is a more challenging time, and it's something a lot of people in the industry hadn't been through because we've had the benefit of such a long bull market run. But for better or for worse, at this point in my career, I've seen it more than a few times. And so this is, I think, an area where we can be a guide partner, sometimes just a sounding board because it's not easy to make these decisions.

ZACK: First of all, I'll give thoughtbot a quick plug since you guys really helped us out. I guess this was about seven years ago now. We worked with you guys a couple years to get the first iteration of this system that we have that helps us...kind of part of our secret sauce that helps us find companies to invest in. So I'm very thankful for that.

And as far as what keeps me up at night, I mean, aside from my cat, and my dog, and my anxiety, [laughs] it's going back to what we talked about before; it's really security. Did we do everything? Are we staying on top of the latest threats? Are we helping out our companies enough? There was an interesting article that just came out a few days ago that talked about how PE companies and some VCs, private equity and venture capital, are requiring security audits of their firms before they invest in them.

And so before they'll make the acquisition, they'll run into an audit, and they'll say, "Okay, well, you're missing these things. We're not going to invest in you until you do these things, until you have two-factor authentication until you have this, until you have that." I think that's an interesting trend. For PE, it's a little bit of a bigger deal since they acquire the company. It's still a way that I believe that we can protect ourselves and our portfolio companies. It helps protect our reputation, helps protect their reputation, and it really gives us the chance to get in there at the beginning and say, "Hey, these things are missing. This is what you should focus on security-wise.

WILL: That's amazing, amazing.


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WILL: I wanted to take a step back; when you mentioned Coinbase and Discord, and you said that you helped them set the direction going forward. Honestly, we may not even know those companies if their original plan would have gone forward. How much has your 43 years of experience helped guide that direction with Coinbase and Discord?

ERIC: You know, there's a saying that history doesn't repeat itself, but it often rhymes. And so I think that's probably the mentality that we try and take from our collective experience as a team that we try to bring to each company. And we meet as a team on Mondays and Thursdays, and it's a very broad meeting compared to most of the investment world in terms of who attends that meeting internally. And so we talk about companies that we're considering and contemplating. We talk about companies we've already invested in.

And I think one of our core cultural attributes that is a great strength is putting our best thinking against some of these problems. Again, when things are going well, those are short conversations. But when someone says, "Hey, you know, I'm working with this company, and we're kind of facing this issue. What do people think? What have we seen that's kind of analogous?" And that's where we get some of these ideas from.

So, for example, on the Coinbase example, we've been involved in a lot of marketplace businesses and exchange businesses. Those are great business models. And Coinbase has a fantastic management team. But thinking about this, this is pre-IPO and pre-direct listing, and when they want to be public one day, you know, there is a benefit to having a recurring revenue stream, a little more visibility. And so, how could we layer that on and make that, hopefully, over time, a bigger and bigger part of the business?

I think in Discord; we had some perspective that led us to invest in the company. In the first place, we've had a lot of success in gaming companies like Zynga, and Supercell, and Niantic, amongst others. We could see how passionate gamers are and, how they come in all different shapes, sizes, flavors, geographies, and how having a communication tool like Discord is really a benefit.

However, we also saw that the cost of producing games continues to go up. And if it's not kind of your full-time job, the likelihood you're going to nail something that a very competitive and discerning universe of gamers wants to play is probably not that high. So how do we think about harnessing that energy, and the talent, and the platform you build in a different way? So I'd say those are kind of some examples where we could think about things we've seen in our perspective but apply it to what's relevant for a specific company.

WILL: That's amazing. I love it. Yeah, I've heard the gaming business can be brutal. What IVP accomplishments are you most proud of?

ERIC: Well, maybe I'll break that into two parts. I think inside and outside the firm; I'm really proud of the team that we've built. And when I joined the firm 11 years ago, we were probably 20 people, 25 people in total. Now we're 65 people. And that doesn't seem like a lot in comparison to big tech companies or hyper-growth startups. But in a business-like venture capital, really what we're doing in addition to providing capital, internally, it's a lot of discussion, decision-making, ideas, thinking. That is hard to do the way that we do it if we get too big.

And that goes back to the size of our Monday meetings, which is rather large and includes a wide representation of the firm. But I'm really proud of the team that we've built. I'm really proud of the capabilities that we've enhanced on the technology side. Really, Zack drove a lot of this in the time that he's been with the firm, and we're leaps and bounds ahead of where we were with your help as well. I think Zack was alluding to what we think is one of our secret weapons, our early detection system, so we're really proud of that.

And then I'd say externally, or with our companies, we've had 131 of them go public. We had 15 of them do that in 2021, none did in '22. So the market's changed quite a bit. Those are accomplishments that, like I pointed to previously, they're milestone events. The pride comes in knowing that these companies that we've worked with have put in the work over years, at minimum, years, to get to that point. And that gives, I think, all of us a collective sense of accomplishment.

WILL: That's amazing.

ZACK: Yeah, I definitely agree with that. In my, I guess, almost eight years here now, we've grown a ton in our hiring. Our team is amazing. It's really the reason why I'm still here, why our turnover is basically nothing. We hire great people. And during that time, we've raised some great funds. We've invested in amazing companies. We've helped out a lot of entrepreneurs. It's just across the board. I've been in this industry a while. I feel like IVP is definitely a unique VC firm, and I'm proud of what we do.

WILL: That's amazing. One of my favorite questions that I like to ask on the podcast is, if you could go back in time at the very beginning and give yourself advice, what would it be?

ZACK: For me, it's stay relevant, I think. And to me, it just means being more involved in everything. Put yourself out there. Be bold. Learn about different areas in the company. Try to attend different meetings. Talk to different departments, and really just make yourself visible. When you do that, I think the rest just kind of falls into place. And it took me quite a while in my career to really realize that. And it's still tough now, but it's something that I'm always trying to do. Historically, I'm a very shy person, but just putting myself out there and doing the best I can in any situation that I find myself in.

ERIC: I think a couple of things, balance, and patience are probably two things, not trying to force it. So I think there's a lot of Yoda Jedi wisdom that probably would be useful. So if you're sort of...when I was first starting out, you're younger and impetuous at times and want to make things happen because you have such a strong desire to try and do something the right way and make a positive impact. But the hardest thing to learn is sometimes the right thing to do is actually to do nothing in the investment world. That is a hard thing for a lot of motivated, energetic Type A people to do, and yet it's sometimes the exact right thing you should be doing.

So I think it's hard to hear that when you're starting out in your 20s. And now that I'm a little older than that, [laughs] I think I can look back and appreciate it. But that's probably, as I think through that question, maybe the best piece of advice. And yet, like a lot of things, we were all taught while we were younger from people who had more experience, or age, or wisdom, or whatever, there are just some things you hear, and it's not real until you've kind of lived it.

And sometimes, in some of those dimensions, you have to make your mistakes before you appreciate them. You guys probably had this experience writing code. Like, there's got to be...I could just do it this way, and it'd be fast. And then you realize it wasn't really that sound or forward-compatible or something. You had to go back and rewrite your architecture, and that's a pain. So I think it's that same approach, thinking with balance.

ZACK: Just to add to what I was saying before, too, I think one of the things also would have been, you know, find something you're passionate about and do it every day. That wasn't the case early on in my career, and I turned to running, and I turned to working out. And I do something every morning, and that really, really grounds me. It helps me focus helps me plan out the day. And it's really just my time that's crucial. And whether it's running, whether it's meditating but just taking some time for yourself, you know, energize yourself, take care of yourself. And that goes a long way in the workplace as well.

WILL: I love it, yeah. That's why it was one of my favorite questions, just learning from your mistakes, learning from what you did in the past. It's amazing. So I love that.

ERIC: Yeah, I mean, since Zack brought up the Lakers, [laughter] and this isn't the Lakers, but it's basketball-related, you guys might remember this old Michael Jordan commercial. He talks about I've missed this many free throws and this many shots and something like, my team has trusted me 80 times to win the game in the fourth quarter, and I've missed. The tagline is something like, I have failed over and over and over and over again, and that is why I succeed. There's definitely some of that in the venture business and the advice I think we could all give to our younger selves.

WILL: Oh, yeah, getting back up. Keep going, yeah.

ERIC: The same thing with Dwyane Wade commercial, you know, get knocked down eight times, get up nine, kind of the same thing.

WILL: Love it. What's something you would love the audience to know about IVP?

ZACK: I think our team and just the way we hire. We hire amazing people. They're smart. They're kind. They're low ego. They're thoughtful. I'm not going to say it's completely different from others, but it is, in my experience, a different culture. And we all get along great. We mesh really well, and we continue to hire great. We hired almost 20 People in the last year and a half. That's a lot, but we still manage to maintain the same level of talent. We help our portfolio companies do hires as well. I think that's one of our benefits. We know talent, and we know it internally, and we know it externally. And it's just a great culture to be a part of.

WILL: Amazing.

ERIC: The thing to think about with us is if you're an entrepreneur building a company, it's tough. Sometimes it's really lonely. We aspire to be partners with entrepreneurs in good times and in bad. We're not the flashiest ones out there. We're not trying to see who has the most Twitter followers. But when you need something, we're there. I think that is something people lost sight of or didn't care as much about in the last couple of years when things were easy. They're not so easy now.

And we take pride in these long-term partnerships, which is why we're highly selective in the number of companies we invest in every year. We're never going to be the most active, but we put a lot of our work, time, effort, energy, mental capacity alongside the capital that we bring to our companies. And I think that's been a great formula for us over our history, and it'll continue to be.

WILL: That's amazing. To summarize, I know each VC firm has their own DNA. What makes IVP different from its competitors?

ERIC: I'd say a couple of things. And again, I've only worked at two firms, and so there are a lot of firms I haven't worked at, so I don't want to attempt to speak too much into the intricacies of how they work. But I'd say inside our four walls, our culture of teamwork and collective outcome and benefit and effort is really special. Every investment we approach has access to the entire firm's resources and capabilities. And I think it's really different.

I mean, we're very happy to partner with one another internally, help each other out, help companies that we might not be mostly directly involved with for the benefit of our firm, and our investors, and the companies that we work with. And I think that is something that a lot of firms talk about. I don't think it's always true at a lot of firms. And so, for us, it's really special and something that we've worked really hard to build as a culture, and keep as a culture, and preserve every day.

Because I think it's easy to feel like you're on an island in this business at times, but we want to make sure that we feel that connectivity as a team. For our entrepreneurs, we are here to work with you and support you, probably not daily because I think, again, that goes back to having the right people, but weekly, monthly, quarterly, over years, that's our approach. We believe great things take time to build.

WILL: That's amazing. Zack, I want to summarize this portion with you. How do you keep your firm and your employees safe from online threats? Do you share that with your portfolio companies? Because I know especially in the tech world and in the news, you're hearing about those scammers, those threats, summarize it for me, like, how do you do that?

ZACK: There are a lot of pieces, of course. And as I was talking about before, I think the most important thing is really just getting buy-in from the whole firm. Me and my team we definitely try out the latest products, get the top-of-the-line security stuff, and really make sure that that stack is solid and that we're monitoring everything and getting the buy-in.

So it's a lot of training. It's keeping them up to date. It's instilling the messages. Like, when I first started here, I did a security training. The firm had never done a security training. We were pretty light on security at the time. And so, I tried to make the presentation fun and a little scary. So I brought in the FBI.

WILL: Wow.

ZACK: The FBI scared everybody a little bit. And then I came on and just talked about what to do and not to do. And I actually had a song composed [laughs] about security and what employees should be doing. It was just a funny jingle that people still sing today. [laughter] But yeah, I think just making it memorable. And we have a Slack channel called Tech Talks. I'm always updating the latest information on there on different breaches and different attacks we're seeing, and what we can do to prevent that, and what our employers should be doing. And absolutely, that extends to our portfolio companies.

And those jump guides, I believe they're out now with all my technical recommendations. We use those internally. I definitely gave those to the firm but also to our portfolio companies. And there's some interesting stuff in there that you may not think of, like removing your information from the internet. Like, get a company, Optery, something like that, which we pay for for all our employees, and it scrubs the internet of your information, and that's great. It cuts back on phishing, spam calls, you know, just going beyond too.

We also have this product that we use that monitors employees' personal email addresses for breaches. So we're not just caring about IVP. We're also caring about what someone's doing in their personal life because that can also lead to a breach of IVP. So yeah, so someone's Gmail account gets exposed, and we're going to know about it, and we can let them know.

And then, really, it's just staying on top of things. One of the things we just did, you know, passwords are the worst, everyone knows that, and so we just rolled out this product called Beyond Identity. And it's a password list provider. The difference between them and other password list providers is they offer a layer of security on top of the password list. So it's not just convenient; it's also added security, which was always my worry about going password list; it's just more convenient and less secure. But this company does it right. And it's things like that, just staying ahead of it. All right, passwords are a problem? Let's get rid of passwords. Following those trends and keeping up to date.

ERIC: I mean, Zack is a very tough critic. So he's given a couple of shout-outs which means he really likes those products, and I'm glad that we have them. And I very much remember that training session that he did for us or organized. And we did a refresh of it a couple of years ago. I think we've done at least two of them now. It sounds really boring [laughs], and maybe I'm just kind of a geek in that way, but that was one of the most memorable training sessions that I've ever been part of in my time at IVP.

And we had Zack's buddy from the FBI come in and give kind of an overview of all the vulnerabilities that they see, and that's obviously very, very cutting edge. And they had some footage of people sort of passing off USB sticks here and there in subways in New York City. So you can kind of see them go in in one entrance. They got a different shot of the camera while they're on the tracks, and they go their separate ways.

I mean, this is straight out of some spy stuff, and it's happening. It makes you think...that's an extreme; we know we're talking about sort of most likely state-sponsored bad guys, but the ones that are commercially oriented, I think maybe they're not as frequent...they're more frequent, and so we have to be on guard all the time, especially as a firm that does have access to and move around a lot of money.

I'm geeking out because I learned a lot from it. And Zack also likes to keep all of us on our toes with a lot of sort's like the security equivalent of pop quizzes. He's always planting fake links and stuff to see who clicks on them. [laughter] And then he's pretty kind because he doesn't out you by name when we talk about them on Mondays. [laughter]

But he says something like, "Hey, you know, there are 65 people who got this test, and the good news is that 50 of you passed. The bad news is that 15 people didn't, which means that could have resulted in a lot of different intrusions. So try and be better," so stuff like that. And it is actually kind of fun and reminds us that while we're a venture capital firm, we are people that comprise the firm just like everybody else, and we got to be vigilant.

ZACK: That's a good point, too, just about the FBI and them showing us all the crazy stuff. I mean, one of the things that they really tried to drill in, and I still talk to my friend in the FBI today, is VCs are a target. VCs are absolutely a target. And it's not necessarily what you have; it's what you're perceived to have.

And so, okay, they probably think we have a lot of IP and a lot of things like that that we don't necessarily have, but they're still going to try to get in. They're still going to try to hack their way in. And I think that's important, too, just instilling that message like, yeah, we're a VC firm. We're a target; you need to understand that; here's why. And that's true for most firms. We're not special. But it's definitely something you need to instill.

ERIC: Oh, Zack's probably going to cringe if he hears me say this, but I definitely take the point that you know, you don't have to be faster than the bear; you just got to be faster than the next guy. So you just have [laughter] to be more secure and more of a pain to try and penetrate, and they'll move on to somebody else.

ZACK: I mean, that's totally true. That's a big part of security. If they come knocking on your door, and you have that deadbolt, and the next house doesn't, then yeah, they're going to go the easier path. So that's absolutely true, Eric.

WILL: Well, you're doing something right because he remembered the training, and he enjoys it. [laughter] You're doing something right.

ERIC: I guess I'm just weird in that way, but it was actually kind of fun.

WILL: Well, thank you, Eric and Zack, for being on here. It was amazing. Where can the audience find more information about you, connect with you?

ERIC: is probably the best place. It sounds so old school, but it's the most relevant. Follow us on Twitter, LinkedIn. But I've had a great time talking with you. This has been a lot of fun. Hopefully, you got some nuggets for your audience, too.

ZACK: Yeah, I agree. Thank you very much for having us. This was a lot of fun.

WILL: Yeah, I've really enjoyed it, so thank you.

You can subscribe to the show and find notes along with a complete transcript for this episode at If you have questions or comments, email us at You can find me on Twitter @will23larry.

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