Wesley Chan (Felicis Ventures) on the Spearhead Podcast

“I always try to say yes whenever I can, whether it’s an investment or helping or being engaged with the company even though I can’t get an investment through my partnership.” — Wesley Chan

Entrepreneur and venture capitalist Wesley Chan went from founding Google Analytics and Google Voice at the tech giant to become a venture capitalist at Felicis Ventures. He quickly learned that his successes and failures at Google over the course of more than a decade prepared him to add value to the entrepreneurs he’d later work with as an investor. “Founders want to work with people who understand their journey…unless you’ve seen this firsthand, it’s very hard to dispense that wisdom,” Wesley says.

When asked what learned at Google he applies to Felicis, Wesley shares that Google Founder Larry Page would consistently repeat a saying that has stayed with him, “A happy user is the best money that marketing can buy.” Google didn’t have a marketing budget to promote Google Analytics, instead, they concentrated on making the customer happy, which was a winning strategy. Wesley says, “It’s very, very easy to lose focus, and the most important thing that founders have to have is a laser focus on building great product.”

Entrepreneur and angel investor Cory Levy speaks with Wesley in this week’s episode of the Spearhead Podcast. Wesley is the Managing Director at Felicis, a successful fund with nine exits of $1B or more over the past seven years including Twitch, Shopify, Rovio, and Ring. Cory and Wesley discuss his past at Google, transitioning into an investor, how Wesley feels about the necessity of conviction, saying no, and why he doesn’t invest in his areas of expertise.

When Data and Conviction are Misleading

Each investor and firm has a different approach to making investment decisions. While data is important to Wesley, he doesn’t believe that where an entry-level company is today will determine its future. “A lot of times it’s misleading because the data is that snapshot of where the company is (in this) moment in time versus where it will be in the future,” says Wesley. He compares investing to fortune telling. “You have to look at this company and say, ‘Five or 10 years from now it will be amazing or will be a dud.’”

Asked about the importance of having conviction when investing in a startup, Wesley states that he hates the word conviction and he doesn’t rely on it blindly. Due to the nature of a startup, with changes and iterations likely, Wesley says, “it’s not really obvious until the final wire has a hit from the sale or from the IPO. There are companies that we looked at that we invested in early on where we looked at the company and go like, “I hope it works.” Then we wound up putting some (money) in only to have it completely pivot and become a big win.”

Wesley believes that because some investors rely solely on their conviction, which is based on what a company is today, they miss out on “massive successes” in the future.

Saying No to Founders and Your Expertise

During each episode of the Spearhead Podcast, Cory asks guests how they say no to founders when there’s no deal to be made. Wesley says that he doesn’t say no. “I don’t say no, I just say not now. People will surprise you as they come back and surprise me.” Asked how founders react to that, Wesley says, “Sometimes they hate me. Sometimes they get angry, other times I hope they take it at face value that this is not the right timing.”

One thing Wesley does say no to as an investor is writing checks to companies who specialize in things he has domain expertise in. ““I’ve learned not to be misled by my expertise,” says Wesley. Instead, Wesley focuses on promising companies in other industries.

You can’t throw money at every problem you face as an investor and hope that it goes away, but taking calculated risks can help streamline your learning curve as an investor according to Wesley. When asked how he breaks into a new industry, Wesley says:

“You just take a risk and write checks. I’m not kidding. A lot of people go, ‘Oh, I don’t know anything about the space. I’m not willing to try it.’ If you don’t write checks how would know? We call them tuition checks. We’re learning. Some of the best deals that we ever gotten into were checks that we had written to other companies that may not have succeeded, but we learned a lot about the space. We’re like, ‘Oh okay, now it’s time to make a bet into these big ones.’”

Listen to the full conversation between Cory Levy and Wesley Chan right here on the Spearhead Podcast.

In the interview, Wesley Chan and Cory Levy talk about:

  • Wesley’s journey with Google beginning in 2002
  • Why Wesley hates the word “conviction”
  • How Wesley learns about new industries to invest in
  • Investing in Ring
  • Deal flow
  • And more!

Show Notes

  • Cory Levy and Wesley Chan begin their conversation by discussing what Google was like when Wesley first joined their team in 2002 (1:07)
  • Wesley discusses how his friends and family thought he was crazy for leaving a Fortune 50 company to work at Google (2:19)
  • “It (Google Analytics) was one of those things where the impact has been bigger than I even thought it was possible (4:50)
  • Cory asks Wesley what lessons he’s taken from Google to apply to investing (4:55)
  • Wesley discusses what he could go back and tell his younger self about being an investor (7:11)
  • “The less that I’m needed by this founder, or the less that I can play a role in it, the better or more likely this company will become a unicorn” (7:30)
  • Why humility is an important investor trait (8:00)
  • Wesley discusses his investment in Australian-based Canva (8:50)
  • How new investors should approach their deal flow (11:19)
  • Why Wesley recommends to just “listen and provide encouragement” when serving on an early-stage company’s board (12:50)
  • Wesley’s “bias towards yes” (14:11)
  • Why Wesley hates the word “conviction” (16:12)
  • Cory and Wesley discuss why Wesley avoids investing in companies that are in niches he specializes is, including business intelligence analytics (17:20)
  • Engineering serendipity as an investor (19:18)
  • How to split your time between projects (19:57)
  • Experienced investors like Wesley are constantly learning and evolving. Cory asks Wesley about a recent iteration or something he’s learned (22:12)
  • How Felicis approaches early-stage investment different than other angels and firms (24:37)
  • “I don’t say no, I just say not now. People will surprise you as they come back and surprise me” (26:31)
  • How investors can break into a new industry (27:11)
  • Cory and Wesley end by discussing who has influenced Wesley as a peer or mentor (28:07)
  • Show close (29:20)
Wesley Chan (Felicis Ventures) on the Spearhead Podcast