Steve Schlafman

Steve Schlafman

Principal at early-stage venture capital, RRE Ventures

THIS CHAT HAPPENED ON March 03, 2016

Discussion

Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
Hi! I'm Steve Schlafman, VC at NYC-based RRE Ventures. Over the last five years I've been involved in more than 200 financings ranging from Seed to Series B and a variety of sectors including marketplaces, healthcare, media, hardware and SAAS. Before I started investing I held a variety of Business Development, Strategy and Finance roles at Microsoft, The Kraft Group / The New England Patriots, Massive and Stickybits / Turntable.fm. Fire away!
Harry Stebbings
Harry Stebbings@harrystebbings · Podcast Host @ The Twenty Minute VC
@schlaf thanks so much for joining us today, I would love to hear how you have gone about building such a successful personal brand in a relatively short space of time? What have been the most successful channels and tactics? Anything that has surprised you in the personal branding space? Always welcome on @twentyminutevc big fans of yours here!
Sumeet Shah
Sumeet Shah@pe_feeds · Consumer & VC specialist for hire.
@harrystebbings @schlaf @twentyminutevc As someone who's been on 20MinVC, I endorse this, as do a few other awesome VCs we both know, Schlaf!
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@harrystebbings @twentyminutevc I've been building my personal brand for 15+ years. These things don't happen overnight. I generally believe it's best to treat everyone with respect, share useful information, don't spam too much, and keep an open mind. I also try to test different mediums and not just twitter. I really wish I blogged more but I'm a bit self conscious believe it or not. I think you just need to be real and use the mediums that play to your strengths. That's what I've tried to do. I've found that I can't be someone other than myself. My dad always used to tell me that it takes a lifetime to build a reputation and a second to destroy it.
Jordan Gonen
Jordan Gonen@jrdngonen · trying my best.
If you were in college right now, what would you be focusing on?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@jordan_gonen If I could go back to college I'd get a dual degree in computer science and health administration.
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@jordan_gonen I'd get a dual degree in computer science and health administration.
Jeremy Levenson
Jeremy Levenson@jeremy_levenson · EverTrue, Customer Support Engineer
Any advice/skills for young professionals recently out of college looking to make themselves more marketable to early stage companies who are generally hiring employees with more experience?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@jeremy_levenson Hey buddy. Good to hear from you. Here's the advice that I give to college students and folks that are just starting their careers: Curious: always ask why does do things work the way they do. Ethical: treat everyone the same and don't cut corners. Consistent: always give the same effort in everything you do. Work Hard: put in the time. Work an extra hour each day. Show up early. Go home late. Take initiative: go above and beyond what is asked in the role.
Jeremy Levenson
Jeremy Levenson@jeremy_levenson · EverTrue, Customer Support Engineer
thanks @schlaf. nice to hear from you too.
Emily Hodgins@ems_hodge · Operations @ Product Hunt
Hi Steve, what are three things every new founder should concentrate on?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@ems_hodge your customer, your initial product, how you measure success. Out of the gate nothing matters more IMHO.
Emily Hodgins@ems_hodge · Operations @ Product Hunt
What has been the biggest challenge of your career to date? How did you overcome this?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@ems_hodge The biggest challenge of my career was when I decided to leave Turntable (a.k.a. Stickybits) right as the product was launching. I really loved the team, which is why I joined, but I really disliked the online music business. I didn't have a job lined up so it was the first time in my life that I was unemployed. I ultimately decided that being without a job was the right decision because I wasn't happy and excited about being in the music business. It just wasn't right for me. I overcame being unemployed by making sure that I was treating it like a full time job. I set up dozens and dozens of informational meetings with founders and execs at companies of all stages. I also got advice from friends that were in the VC business. I also offered to help as many people as I could for nothing in return. When a great opportunity came up at Lerer Ventures, I was in a good position to take advantage of it. Thankfully I was extremely patient throughout the three months I was unemployed.
Jake Crump
Jake Crump@jakecrump · Community Team with Product Hunt
What's something you've changed your mind about in the last year?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@jakecrump that's a really great question. For a long time, I believed that apps could solve just about every problem. The more time I dig into healthcare and some other verticals, I now believe that the brick and mortar is still really important because human touch and face to face interaction is really important for the soul.
Ben Tossell@bentossell · newCo
Hey Steve! What are some of your favourite questions to ask founders?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@bentossell Here are some of my favorite questions: 1. What was the impetus for starting this business? 2. Why are you devoting the next 10 years of your life to this company / problem? 3. What is the unique insight that led to the creation of this business? 4. How does your company make the world a better place? 5. What are some books or blog posts related to your opportunity that I should read?
Tony Xiao
Tony Xiao@tony_xiao · Product Guy
Ben Tossell@bentossell · newCo
What are your thoughts on how people are talking about all the current investments in tech startups is essentially dead money? People wont get their money out and then some unless there are exits or acquisitions and these are not happening at a speed where it looks super attractive to be investing in these startups. Theres obvious exceptions but it seems that some founders seem to ignore the fact that its not unreasonable for investors to expect a return on investment in 3, 5 or 10 years.
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@bentossell I certainly don't think my investments are now "dead money." I try to focus on the things that are front and center and will help the company get to the next stage. In this business it's important to maintain a long term perspective even though board meetings are every three months. Any time I make an investment and take a board seat, I recognize that I'm signing up for a 5-10 year relationship. That's why I strongly believe that most founders shouldn't just rush their process and only optimize for the terms. Instead, they should try to get to know the investor and the firm to see if there can be long term alignment even things don't go as planned which is more often than not.
Tony Xiao
Tony Xiao@tony_xiao · Product Guy
@schlaf @bentossell It's really interesting how you are implying board meeting every 3 months as short term. Sometimes when we work in early stage startups 3 months = very long time horizon.
Alex Stein
Alex Stein@alexbstein
Hey Steve, is there a market you're particularly interested in at the moment?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@alexbstein I'm digging into a number of markets at the moment. Here are some of them: Mobile live streaming. Intersection of biology and technology. Autonomous vehicles. Healthcare.
Adam Marx
Adam Marx@adammarx13 · Freelance writer/editor and music addict
Hey @schlaf, thanks for taking time today! I'm always interested in the more amorphous qualities which draw investors to particular founders. What are the qualities which you find magnetic and which you love to see in the founders you work with?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@adammarx13 I tend to gravitate towards founders who are good story tellers, hyper focused on product, appreciate brand / voice, understand their customer, mission driven...there are others but these come to mind.
Brett Bivens
Brett Bivens@brettbivens · Early Stage Investor at TechNexus
Hey Steve - thanks for taking the time to answer questions. Just had a chance to meet Maria from your team the other day and love what is going on @ RRE! Interested to learn more about the relationship you have w/ LPs at RRE. Since firms typically need to start raising subsequent funds prior to the full realization of returns for the previous fund are there any non-return focused metrics (% of companies receiving follow on, for example) that you use to communicate your success as a fund to people you want to re-up for the next fund? Thanks!
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@brettbivens There are several metrics that we and LP look at. These include IRR (internal rate of return), DPI (distributions to paid in capital), and TVPI (total value to paid in capital). For the sake of time I won't go into each but here's a good overview from Silicon Valley Bank: http://www.svb.com/pdfs/vc_2008_... I believe there are other metrics that are important. Some of these are internal facing such as what % of deals did we see, how many large deals did we miss, how many deals did we lose when we put down a term sheet, etc.
Brett Bivens
Brett Bivens@brettbivens · Early Stage Investor at TechNexus
@schlaf Thanks!
Jeremy Levenson
Jeremy Levenson@jeremy_levenson · EverTrue, Customer Support Engineer
What are some blogs/publications/websites that you read everyday?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@jeremy_levenson I get most of my news via Twitter, Nuzzel, theSkimm, Launch Ticker, Wall St. Journal, etc. I enjoy the following blogs: http://avc.com/ http://blog.semilshah.com/ https://stratechery.com/ http://continuations.com/
Alex Stein
Alex Stein@alexbstein
What separates great VCs from the rest?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@alexbstein ability to have conviction when no one else does. Willing to hang in there and be a good partner when things aren't working out. Humility and empathy for both the founder and their customers.
Sumeet Shah
Sumeet Shah@pe_feeds · Consumer & VC specialist for hire.
What's your favorite plant from The Sill?
Andrew Erdle
Andrew Erdle@gooderdle
@pe_feeds all the upvotes
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@pe_feeds I love them all :)
Sumeet Shah
Sumeet Shah@pe_feeds · Consumer & VC specialist for hire.
@schlaf RIGHT ANSWER :)
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@pe_feeds I love all of them!
Jake Crump
Jake Crump@jakecrump · Community Team with Product Hunt
What does a typical work day look like for you?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@jakecrump Here's my typical day: I'm up every morning at 6am. Hot yoga at 6:30. Breakfast meeting by 8:30. Back to back meetings from 9-6pm. Might get 30-60min of email in between. A work-related event or dinner with a founder, exec, friend, etc.. Spend time w/ my wife. Read a book from 10:30-11ish. Bed by 11pm. Rinse and repeat.
Ryan Hoover@rrhoover · Founder, Product Hunt
Hey, Steve! As you know, I was a huuuge turntable.fm fan and have fond memories of slacking off at work with my coworkers/friends. In hindsight, what would you and the team have done differently to make it succeed?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@rrhoover I believe the team Turntable.fm nailed the viral hooks but one could argue that it was almost too engaging. Music tends to be a sit back experience and with Turntable your head had to always be in the game. I think that's was one of the downfalls of the service. There's something to be said about using Pandora so you can set a channel and then forget about it. I would have liked to see the company create an experience for a more casual user.
Tony Xiao
Tony Xiao@tony_xiao · Product Guy
Do you think Stickybits was too early? Is it going to come back as a different form / company?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@tony_xiao I don't think Stickybits was too early. I believe the interaction model was broken. There's just too much consumer friction associated with scanning barcodes and there's not enough consumer value. That said, I believe the core idea of connecting the physical and digital worlds was a very early idea which is now playing out in a number of ways.
Jake Crump
Jake Crump@jakecrump · Community Team with Product Hunt
Who are some of your role models?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@jakecrump My role models include: 1. My wife, Eliza. She's the founder of thesill.com, a bootstrapped small business here in NYC. 2. Jonathan Kraft, President & COO of The New England Patriots. Jonathan put me into the venture business and taught me about work ethic, family and sustainable success. 3. My high school football coach, John Hoffman. Coach Hoffman taught me to work hard, be dedicated, and take advantage of opportunities. 4. My middle school Principal, Ron Landman. Mr. Landman was one of the first people to believe in me.
Ben Tossell@bentossell · newCo
What advice would you give your 20 year old self?
Steve Schlafman
Steve Schlafman@schlaf · vc at rre ventures
@bentossell making a change is much easier than your brain leads you to believe