Transcripts
HM Ep.20
Apologies for the typos, this is an AI transcription
[:All right, so really excited about this episode. We've got Fred Dustin here. So Fred was a partner at Atlas, uh, ventures. He was at Excel and he is now set up Stride. Um, he's probably got one of the best track records in Europe in investing. So he's invested in Deliveroo, Zoola, also Pillpack, also Cazoo, and also my third company Screen Loop.
So I've got to know Fred through the journey and. He's one of the most exciting characters. He's a big, big personality, but really, really deep. So I've been really hoping to get him on the podcast and we finally got something locked in and really excited. Where I wanna start, Fred, is you set up Stride, right?
Stride is already one of the best seed funds in Europe. Like people have only got good things to say about you guys. Like what made you set it up? Because there are obviously certain things you've seen. That wasn't working at other funds. Right. So that's where I wanna start. Like why did you set up Stride?
Well, you know, part
[: [: [:Reflects you, and I think you'll know that you're a founder. You're a founder. And I think there's quite a deep joy in that, which is very different from running someone else's shop. Yeah. And you're, when you run Excel, okay, it's a beautiful firm. It's a very well established fund, but you're oiling the wheels that were created by two very talented gentlemen 30 years ago.
Whereas here, you know, when I started with Harris Stubbings, It's the two of us in a laptop, and in fact, we didn't even have laptops. We went for our first fundraising meetings and we landed in Palo Alto. And of course, you have to add a bit of legend. So we went to the Palo Alto Apple store, and bought two huge, the biggest power books we can get our hands on.
And went to work on the first deck, which we prepped overnight for our first meeting. It's just so much fun, right, to kind of go through these somewhat heroic moments and it's really part of the founding journey. And so that in itself was kind of a reward,
[:Is it the name? Cause I dunno if you've spoken to his website, B talks about. The chaos. And what bit did you enjoy most about the branding?
[:Cuz the world is moving so fast. You know, we weren't designed for that. Right? We were designed for like chilling out by the lake and on occasion going to hunt in the forest. So, so we were designed for this homeostatic state, and on occasion, you'd kind of have a fight or flight moment, and then you'd go back to chilling by the lake, and instead, we're constantly being challenged and being.
You're attacked by all sorts of external inferences. So I'm like, okay, so thriving on chaos is interesting as a concept. Startups thrive on chaos. The reason why we beat incumbents is that we're highly adaptable. And I was like, okay. How would you design a venture firm that would thrive on chaos? What would that look like?
The things like, okay, so can we do away with all the processes? Can we reinvent the way we interact with founders? To what, how do we power decision-making on the fly? You know, how do we espouse the way founders work and move with the kind of same speed and ethos, and approach? And that's sort of where I started also.
You know, I love my job. I don't love my industry. There's a bit of the punk in me, so I'm like, oh, can we be like the punk VC? Can we be the anti-vc? Do you know? And of course, that in itself is not that useful because are we doing something that is meaningful for founders? But I definitely started with this.
Okay, how many rules can we break here? Can we go out to the market and say nothing about us? Is about. , we're all about trust. And then can you actually mean it? Yeah. Can it like mean something in the day to day? Because all the VCs in the world say, oh, I'm a value-added VC. I mean, it's like, pass the bucket. Do you know?
Like everybody, it's another one. The same thing. But it's like, okay, but if you're trying to ground yourself in trust with founders and you know that everything's chaotic, so we don't have the data we, you know, everything's gonna evolve in real-time. Then all you're trying to be is like, can I be the best fabric to help a founder build a company?
And that's the kind of thing I was thinking of when I started Stride.
[:And then literally that next Monday we met the Stride team, the whole team was there. All of them literally like have their hearts on their sleeves. Everyone speaks only from the heart. There were no, like, there were no bullshit words. So I honestly, in that meeting, it was just all like heart and it was just all good content and like everyone was up to speed where we were like, I normally turn up to VC meetings and everyone's like, somebody brought up to speed, some aren't, but like everyone's up to speed.
And then literally we met everyone on Monday. Then on Tuesday we. Like went deeper and then by Wednesday we had a term sheet. Oh shit. Move. It's like literally the smoothest process I've seen. And also the offer that they gave, they don't have any preferences. I dunno if you do that for everyone, but for us, that's a huge deal for founders.
So what he is basically, so pretty much every single other term sheet I've had has got preferences, right? So that means if, you know, if we don't make X amount of money for the investor, they are guaranteed their investment. Right on Fred's temp sheet and strides. Like there were no preferences. He's got the same shares as me, same class.
That is super rare. And so everything he's saying, I'm like, it is true. But how does that make
[: [:How do, yeah,
[:Right. It's designed in case a company doesn't get sold for that much and people are trying to take their cash out. Yeah. And the whole idea would be, Hey, I gave you $10 million. You know, you, all you had was IP and uh, you know, your own personality. You know, that's my protection to make sure you don't sell the company the next day for 5 million and then get half my money back whilst you're getting an exit.
That's why people do it. It's kind of logical, but whoever made money on these downside protection terms, it's not what it's about. What it's. Hiring founders to make the right decisions to run faster and to build bigger businesses. So if you look at it at the scale of a portfolio, it's like it makes absolutely no difference.
What it does do is it creates all these bad wills with founders where you're like, damn, we're not aligned. They've got this kind of protective provision in there that they can take their money out and I might toy away for years just to pay back that preference. I'm like, what are we trying to do here?
So this is back to this alignment and trust thing. It was like, do I really think founders are not trying to build the best possible companies? Especially when they take venture money, right? Do I think they're not ambitious? Of course, they are. So it's like, why would I go bother with that and sort of set, you know, it's like your very first action together is to sign the contract and the contract's already misaligning you.
Yeah. I was like, okay, so my fiduciary is to make a lot of money for, for. investors. Mm-hmm. . I'll do that, but you know, I know liquidation preference in my term sheet to kind of make that happen. Yeah, that makes a
[:How do you choose
[: [: [:So people always try and say, well over-index on the team. Oh, no one knows. Yeah. Or maybe the corollary of the Oh, you mean you don't fund shit teams? That is a surprise. Right. Um, so in reality, the answer is all of it. And if you are sitting with a great founder and you're talking through a business problem and you're trying.
Together, kind of try and figure out what the future might look like. We know companies pivot. We know they change their path. We know you know that the business plan is poetry at best, but the quality of the discussion and the engagement you're having around the business is the way in which you're forming your relationship.
It's not just, do I like you? It's also like, Hey, let's talk about the company you're trying to build. And if it's a sophisticated conversation and it's engaging and it's smart, and you're thinking on your feet, okay, now we're building something, right? We look at it and we have this kind of little decision-making engine.
And you know, question number one is, is there a unique insight or are we attacking a problem that's fundamentally interesting enough? Like is it big enough? Does it matter? Does it matter to the world? Like is there a sort of level? importance to what we're trying to do that's sufficient. And ideally, do you have a unique viewpoint about the world you developed somehow?
Like do you bring something unique to the table or you're just replicating something you saw in the US that's working, right? And then level two, it's like, okay, does it have some form of unlimited upside? I don't need to touch it today. This is a classic market size mistake at Uber. But you know, is there a narrative whereby this thing becomes really big and important and moves the needle?
Okay, number. Can we execute it? Now we're switching our mindset and we're like, actually, in the next 12 months, 18 months, two years, is there an execution plan we can get behind? Again, I know the plan's gonna change. That's not the point. It's like, are we having an intelligent conversation about how we're gonna build it?
And then we get into, can we fund it? In other words, can we talk to the capital markets around it and I should get this thing refinanced? And then what kind of risks are we taking? And it's important that I don't know what's gonna work. Like in fact, my opinion about what's gonna work is not as interesting as my assessment of whether the risk we're putting in the portfolio is the right kind of risk.
So with my team, I always say your opinion's valuable. It's not as valuable as the quality of your thinking because you know, I like the margin. I don't like the margin. I like the product. I don't like the product. I like the founder. I don't like the founders. Like, okay, this is the battle of opinions. Yeah.
Yeah. Okay. Alright, so everybody's got opinions, but what's more interesting? Are we putting the right kind of risk profile in our portfolio? Are we putting things that can move the needle and are we backing the kind of people that are effective, or you can check is whether people are learning organisms, like what's the velocity by
[:Right, but in metrics, yes, exactly. But. The Stride conversation. It was a really deep conversation. We were going to really extreme depths on certain topics in within the screen loop business, and it was a real discussion and we got to see indirectly what our values are. Yet how do we think on our feet?
You're asking really hard questions that we hadn't solved and we're trying to solve them live. So it's a bit embarrassing. I don't actually know, but like, yeah, we know you don't know, but let's just talk about it. I'm surprised people don't do more of that. Even, it's funny, even like dating, like, you know, you can ask the classic questions, but okay, let's solve a problem together.
Let's pretend we have to, you know, post this party. Let's, let's, let's try to solve it together, and like you'll know how the other person is and you'll know, oh my God, this person can't deal with pressure. God, this is terrible. , we're not the partner. But it's the same thing with the founder thinks in a weird way, you guys have.
It's like a live case study and it's genius.
[:I mean, that's like my day-to-day mo. So I'm like, okay, how do I make this more entertaining for myself so I don't die and, and be more valuable to the founder where there's an easy answer to that, which is. Why don't we look at your business together and I might learn something and you might learn something, and let's have a real conversation.
And how should we structure the team and can we rethink your go-to market? How do you come up with pricing? And now we're looking at things from different angles. I'm not trying to tell you, oh, what are your metrics? What are, you know, I'm not going through some kind of set of rules. I'm actually having an entertaining conversation with someone who's intelligent.
I'm learning. They're learning, and then we're like, oh, and we come out and we're like, okay. That was a pretty good interaction. You know, I'd almost like to get to a place. I don't make decisions anymore. I just learn, learn, learn. And then the decision emerges out of the quality of the conversations. Cause you kind of know when something is backable, not backable, especially when you have a team around you.
Because the collective knowledge is such that if you're having high-quality conversations, the decision kind of comes. Of the woodwork, you're not forcing yourself to like, should I do it? Should I not do it? Should I do it? Should I, yeah. It's like this quite obsessive moment where you're like, should I spend another hour with this person?
Yeah. And you're constantly that mindset of like, yes, no, yes, no, yes, no. And I'm like, okay, but what about learning? What about, listening, what about educating yourself, and then. Collectively will come to the right decision. So that's also the mindset shift and it makes everything kind of richer because now I'm with a founder.
It's not like we are co-creating or anything, but you know, we're having a collective discussion about how to build a business and so they'll feel better about it. It's more interesting for me. That's a genius, and we come out in a
[:Tick, tick, tick. Yours is like, okay, let's go into a creative state and let's, um, brainstorm. So I guess with certain founders it probably works well, but sometimes or you… it is …
[:So yes, the frontal cortex, is fully engaged. It's not like you can manage your level of energy around it necessarily, but it's rich and so, yeah, I could also sit back and take notes and go and put you in the, in the machine learning algorithm. Yeah. Yeah. Wait for the answer to come out. But
[:Is it, I know you're a very reflective person, right? Like, what's your level of balance right now? Do you feel you're working too hard or do you feel you've got the right balance? Or how are you feeling?
[:And then over time you kind of go like, well, no. So A, I need to recharge. Sometimes, especially if you're trying to feed creativity, B, you do have limited amounts of energy and then you kind of get more mindful about where you spend it. So the question is not where you work hard, it's whether you are doing the things in your day-to-day where you are most impactful and in your zone of genius or power excellence or whatever you want to call it.
So what I've worked on quite a lot is. Take out all the stuff that either somebody else should do better that didn't need to get done at all or, whatever it was so that I can spend more time doing the things that I'm uniquely suited to do. It's like designing your operating system and then constantly refining it over the last six months.
What are things that I did that detracted from my energy that I didn't need to do that somebody else could have done better? And then how do you like gradual? Take these out. By the way, hack number one is, Worried about responding to email. Like if you can achieve that and be, and be calm, like that is like the highest productivity.
I
[: [: [:Like we are just, that's a prime example. You're right. If you. Switch that. That's quite powerful. Totally.
[:Even in the public comments, like learning the DMs.. But I've actually trained myself to just like being at peace with it, which is hard when you know you're inherently a people pleaser. Yeah. If you can
[: [:Yeah. If it's important, WhatsApp me and I may read it and I'm like, what? Uh, legend,
[:So is any advice you can share with people on just Yeah? How do you make sure that Yeah, you don't have those situations?
[:I can feel that you know, the impact is no. But also I feel for them, right? They're like, this is their life's work. I mean, it's, I still feel guilty every time. I don't respond. Like still to this day, right? But then at some point, you're like, okay, something's gonna have to give. What is the one thing? We don't have hours.
You can do whatever you want. You cannot expand the number of hours you got. You can manage your energy, you can manage your nutrition, you can manage your delegation, and a number of hours. You can't, and then you get to this place where you're like, okay, it is physically impossible to answer more than. , you know, 30% of the requests for the time that I get, let's say 20% or something.
So then you get to the art of no. And the art of No is now with friends, with friends of mine, I'm like, I'm sorry I'm slammed. I cannot spend time on a coffee. And you know, I would love to see you a bit later in the year for drinks with other people, et cetera, but I'm not spending an hour. For coffee to advise you on your business.
And some people get pissed off. Do your real friends get pissed off? Hell no. They're like, I hope you're doing okay, man. You know, what can I do? Which is the same thing you do for a real friend of yours, by the way. So you know, yeah, there's filtering there. But do people care about you? They. They like if I, if I say no to request help like there's a good fucking reason, or I'll ask to clarify.
I'm like, is this something I'm uniquely placed to do? Is this something that's very important to you? Because sometimes you wanna encourage people to state their needs. I mean, especially I find it especially true with women, women don't ask for help and then you kind of go like, all right, I'll just make sure, like, if this is important to you, I'll hundred percent do it.
But I almost like you. Tell me it's important to you because otherwise, people ask you all the fucking time like, Hey, can I pick your brain? You know, I don't wanna pick your own brain. It's such a weird saying. Yeah, that needs to be, it's awful. I always have this image of people insect
[: [: [: erything at the same time. So:Now, retrospectively, I can tell you it was pretty, pretty hard, uh, depression. But being a guy who never fails, I'm like, I'm just gonna power through this shit. And that was a wake-up call. And it started with me trying to understand my divorce. He's like, where did my family go wrong? I have three kids, you know, like a family guy.
I was like, where did I go wrong? And then you start to. And when you open the door, then you open the next door, then you open the next door. And I would say that there is two levels. There's a level where you become functional, so you can do cognitive behavioral therapy. It'll make you functional. So you can go back into the world and go like, I fixed myself, I'm now functional.
But if you open the next door, then you're like, Okay. I don't just want to be functional. I wanna deeply understand myself and the world, and that's like the red pill experience, right? This is where you kind of wanna pierce through the veil and you're like, how do we function? What really drives us? What's really real?
What did we choose? We're on some kind of rails towards success, et cetera. Did we choose the rails? Who designed the rails? And then you get into that level of exploration and like, where do I come from? So society, my ancestors, all the conditioning. And then what's my journey as a child and how much of my patterns, how much of I carrying for my childhood?
And then, you know, you open Pandora's box, and then it's a beautiful exploration. And the thing is that journey never stops. And then it's a question of how uncomfortable are you willing to be. Like, you know, are you okay to sink to the bottom of the pool before you kick back up? Or are you gonna find the discomfort too much and you're just gonna get out of it before you've learned what you need to learn?
And that journey, It's like an ongoing journey, and I find it in itself fascinating. If you look at the Buddhist, uh, Zen Masters, the first version was about not feeling pain, right? The first version of Buddhism was about distancing yourself from outcomes and from feeling pain, and, you know, the idea was essentially to remove yourself from the Vic Institutes of the world.
The second turning was more interesting because suddenly they were. Okay. Everything is unity. We are all part of a whole, and we don't even understand to what extent we're part of the whole. Now, if we look inside ourselves, so if we go deep, deep, deep, deep, deep, we will find both emptiness and the vantage of the ego.
We'll also find. Everything. So if you go deep enough inside yourself, you reconnect with the totality of the whole, and that's where you start to feel part of the universe again, and your consciousness expands out. And so that journey within is the key to going. Outside and then able to be of service to the world.
And it's like, and it's the classic thing. Or if you don't fix yourself, you're not gonna be able to help anybody else. Right. Or at least not that efficiently. So that journey I find amazing.
[:I've got to meet all those guys. And even the investments you're making, I can see it's all thought through from a good place. Right. I'm noticing that in the space we're in, whether it's entrepreneurs or investors, a lot when people haven't hit that state. Right. And I know it's a journey, but I can also see a lot of blockages cause there is so much greed and so much pressure from LPs and so much pressure from founders.
So, I'm realizing that and this is part of the reason why we created this podcast, cause I feel like the heart needs to come out more and is anything, you know, and this is talking about our industry, is there, do you have a theory on why the greed is more than the love? And can that change I'm sure you've thought about this, so what, what's your latest thinking on just why that's happening and what can we do to change it around?
[:Like, does it matter which country you're from? Countries are constructs. They're designed. So you would go to the Army, feel proud about your flag, and go fucking kill the guy next door if you're being asked to. And so we can also raise taxes. I mean, you know, it's like everything's a construct like that that divides humans, right?
And so, Okay, so you're deep into the societal problems and as you correctly point out, the divine feminine, the feminine is being repressed. And so the things that have to do with listening, Empathy co-creation are not very present. So what can we do about this? I mean, it is a whole of society problem that you know of which venture is one example is probably actually not the worst, but you know, it's kind of certainly prone to the same kind of issues.
So step number one is like, how do we bring the feminine back and I mean the divine feminine as well? Women, but you know, inside men for example, because what do we suffer from? And what you're describing, is greed, the need to dominate, et cetera. Uh, there are expressions of immature masculinity, actually the king archetype.
In its most mature version is somebody who looks after the land. The king archetype has nothing to prove, in fact, it doesn't work for himself. He works on behalf of the land and everybody on the land. So the most mature version of masculinity would be like, I'm here to look after everybody else. You know, it's the classic servant leader, et cetera.
Mm. Okay. Can we get back to it? As a leader of a company, as a, you know, a venture capitalist. I don't know that we have that much importance, but certainly for founders. So, you know, to what extent can we power our founders to be more like that? Because by the way, they will be better leaders. And then for the feminine side, and for women, in particular, you see the type of leadership they bring.
You know, is getting more recognized, but it's still not, you know, obvious for them to kind of breakthrough, you know, the suppression of the voice, suppression of the real power, suppression of the full breadth of their personality, and so, we are all part of the system. Look, in a way, I'm also quite humble, which is if I can impact my team, my family, first, my team, the fans that we back, great.
Okay. So I'm having a little bit of non-linear impact and then, you know, That's already a start. You know, by the way, starting with myself cuz I'm far from perfect. So start with cleaning your own front yard and then you know a-la, Jordan Peterson, right? And then kind of concentric circles of influence beyond that.
I tell you what's super interesting though is that when you start showing up differently, People react very differently to you and it's incredible cause you kind of manifest a different way of being and more openness and more conversation and more asking questions. And the nature of your interaction with everybody starts to shift.
And to me that's been the biggest realization is to see, oh, there is this. Rich interaction inside people, you, you just have to invite it in, you know? And so I think that's where the chain comes from. And then you model it with the podcast and with your venture studio. And you know, I try and model it on a small scale with, like I said, my team first and the founders that we back, and then also where we director our capital.
I wrote a formal impact thesis. It's not like we're an impact fund, but it's like in what way are we directing our capital toward things? Hopefully, make the world a better place. And what does that sound like, look like, feel like
[: [:would
[:So how is your worldly perspective influencing those
[:We can espouse their mission and we view their mission as clearly having a positive contribution to the world. And then for us to go, when we raise money and say, this is part of what we do, by the way, it should matter to you. And it's not fucking, sorry, apologize for my language, ESG monitoring, or anything like that.
It's like, does it actually have an impact? It's not about the statistics. You know, this is about, you know, are we backing people we can be proud of, projects we can be proud of? And again, one check at a time, one company at a time. You try and make a difference on that. Do you
[:Right? Did you deliver them returns? Right? So, I do feel there is this, maybe is the esg, we have to probably use that, but maybe it needs to be a smarter way to factor in other attributes, like whether it is contributing or, I Have you thought about just the way you, which you model your success right now?
Cuz yes, you can talk about your returns and yes, your, you've done really well on that. But then are the metrics that I guess we can probably start looking more at to show that we're just more than ROI driven. Cause that's the thing I'm trying to look at. It's like. You know, sometimes I'm forgoing an idea which might make me too X richer, but I'm willing to do that because I know when I'm, you know, at a certain point in my life I'm gonna reflect Bango actually, it's not about how much money I make.
It's about more than just how much money I make. Mm-hmm. . But there is no metric for that. And we're such a society where we need a number. there is one
[:Arab Spring, you know, citizen journalism. Yeah. You know, self-expression. And so very often, even when you think technology will have a positive impact, there's nothing inherently good about technology, like the ethical choices that you have to make over and over again. So I don't have a good answer to that. I'm actually quite nervous about the measurement framework.
I'll give you one example. Have you ever tried to define race? And the race is a loaded topic, especially cause I'm, cause I'm a white man. Who the fuck am I to talk about race? But go with the exercise for two minutes. British-born Indian. British-born Pakistani, Indian. Bangladeshi. The moment in people in the US goes like Asia.
Yeah. Yeah. It always makes me laugh. I'm like, Asia, Indonesia, Philippines. Do you know? And so you, you run into these issues with. Citizenship, country, race, mixed race, et cetera, and you kind of go like, okay, there is no way to design measurable constructs that don't somehow force people into groups they don't belong to.
Pit people against each other according to groups or full prey of measurement methods that simply don't work. And then you go like, as much as you wish you could do it when you try to do it in practice, it's like good luck. And so, you know, it's for the measurement stuff. I'm like the kind of staying away from it because I think it is a. on the edge of an unsolvable issue.
[: [: [:Meditation belongs to everybody. Yeah. Meditation is as simple as pausing for two minutes and doing whatever methodology you want to observe your own brain. So nobody needs gurus. Yeah, because self-awareness, the journey towards knowing yourself, et cetera, are all things that belong to all of us. And your grandma might be the wisest girl you'll ever meet.
Yeah. Yeah. So that's step one. Having said that, I love the poet David White. David White, w y h y t e. Okay. I've never really read Poetry Uhhuh and with David White, basically, the role of the poet is to help you look at the reality around you differently and in a deeper way. Right? And David White, his obsession is, how do I increase the quality of the conversation that you have with the.
And I just adore his work. He's also a great speaker because he's basically somewhere between a monk, a philosopher, and a poet. He's also hilarious. I found him quite profound. To give you one example, he wrote a book called Consolations, which is about reclaiming words of the everyday language you lost.
The meaning of one of them is beauty, and he writes his three pages about beauty. It's pros and at the end, he writes: “Beauty is the harvest of presence”. And if you want to pinpoint the single most important sentence for me in the last few years, it is beauty is the harvest of presence. I think he's amazing. There is a guy called Jeff Foster.
He's unaffiliated. He's unaffiliated with anybody. Okay? He doesn't belong to any school etc. Jeff is all about accepting all of your feelings. He's like, scream your anger, feel your sadness. You know, this is, he's the anti spiritual bypassing guy. Cause the thing that is really annoying with this whole movement is people who go like, I'm in touch with myself, and I see I have compassion for the world.
And then all it takes is you literally, you probe them with your little finger and they'll get upset. Right? And you're like, okay, yeah,
[: [:To watch that we don't end up with a productized version of spirituality and with a whole lot of spiritual bypassing, oh, I did, I ask last week, and look at and I'm wearing a robe and I'm connected. You know, and you're like, yeah. You know, it's like really hard work actually. Um, and you don't wanna be very humble about how much progress.
You think you've made, do you know Ramdas? Do you know what I mean? Yeah, yeah, yeah. So Ramdas, one of my favorite sayings by him is he went, you know, he went to India for 20 years and he was in the caves and the darkness and you know, he was Maharishi. And anyway, he comes back to Boston and he hangs out with a buddy of his for a week.
And the ga, the end of the goes Dick, Richard, Dick, you're still the same asshole. You were a 20-year-old. And Ramdas was laughing and he was like, I'm still the neurotic person that I was. The only difference is my neurosis is allowed in for tea, but I only invite them to stay the night. Ah. And I was like, perfect.
Yeah. That's, you know, this, the shit that we grew up with would always be with us. And it's like creating just a moment of when it's a moment of choice. Before your patterns take over or before your reactive self takes over and you know, that's kind of what we're striving for. So I think it's important to stay quite humble, man, this shit.
