Coffee Chat: How do I start a platform strategy at my VC firm?

About this Series: There’s a list of questions that I get asked a lot about my career and my job, so I’ve decided to turn these into a short series of blog posts that I can use for reference in the future. With each of these, I’m going to pretend like you took me out for a cup of coffee and asked me this question. So I’m going to write for exactly as long as it takes me to finish one cup of coffee. Ready? Here we go.

This is the one of the most common questions that I get asked these days. And to be fair, I love talking about it. But the tricky part is, this is also sort of like asking, “How do I create an investment strategy at my VC firm?” At the end of the day, there are far too many variables and peculiarities to your specific context that I won’t possibly be able to understand in a 30–60 minute meeting. If you’ve ever got me on the phone to talk about this with you, it’s more likely that I turned the tables and instead asked you a bunch of questions. So let’s first try to learn a bit more about your context, starting with the big one: “Why are you interested in building a platform strategy? And what do you think your firm or platform can offer that’s unique?”

Take the time you need to really consider this first question. If you can’t come up with a compelling and specific case for why you want a platform strategy, you’ll spend a lot of time frustrated in the middle later on when no one can visualize success. Here are a few bad reasons to start a platform strategy: “Because our firm is getting bigger and it’s time” or “Because we want to be more marketable to founders” or “Because our LPs want to know how we’re addressing this.” If you feel yourself drifting into this “fuzzy zone,” force yourself to go through the “why” exercise internally again with all the right stakeholders.

As for the second part — I’ve noticed that the best VC platform strategies have very specific goals and objectives that cater to the firm’s strengths. Maybe, like a16z, you know you have this massive network of C-level executives all over the world and you can get your startups in front of that audience through executive briefings. Maybe, like First Round Capital, you know that the entrepreneurs and teams that you’re engaging all have one very specific thing in common, and as a result, you can build a cohort and community-like experience around that phase. At USV, we lean heavily on our investment thesis and look for ways where we can use network effects to help our companies build better businesses. To bring this network together, we connect employees with each other through more than 150 events a year, including peer summits, management trainings, all-remote roundtables, and shared resources and surveys.

I mean…events can certainly be a part of your platform strategy. It’s been a big part of our strategy at USV for years, dating all the way back to 2010. But let’s be honest: The world doesn’t need more events; if anything, we just need better events. The way we define an “event” can be anything from a 25-person all-day summit to 5 people around a table over lunch. The majority of our events have fewer than 30 attendees, which is by design. These aren’t structured as “show up and listen” sessions but as interactive discussion groups. We’ve decided that the best thing we can do for our companies is to connect them with people thinking about similar problems that they may not already have the chance to know. But this takes intentional design and a lot of curation effort to get the right people in the room.

Another event format is more external facing, startup ecosystem building stuff. We happen to do less of this at USV today, but that doesn’t mean it won’t make sense for you. The most important thing to keep in mind is this: If you’re going to invest a large amount of time into events, make sure you’re clear on your objectives from the start. Do you know the answer to this question: “What could your portfolio use from you the most?”

We like to ask. Like, all the time. We send regular surveys after every event and one big annual survey where we capture as much information as possible from the network. We also listen for inbound questions — whether an email over the CEOs list or a DM in Slack asking about a specific problem someone is experiencing at work. Sometimes we’ll turn those questions into portfolio surveys, sometimes they’ll become roundtable events, and sometimes we’ll light up a new email list or group out of it. At the end of the day, a lot of this job is about listening, followed by deliberate facilitation. So make sure you’re giving people the space they need to reach out to you.

Great goal! But before we can answer that question, there are a few more I have to ask first, such as, “What do your founders all have in common with each other? And why would they want to talk with each other?” While it is mildly interesting that they are all linked through a shared investor, it’s not an instant “bonding glue” as you might think. In our case, we have companies in USV’s portfolio ranging from blockchain businesses to women’s health apps to educational tools and finance platform. Before we were able to facilitate a dialogue among any of our founders or CEOs, we had to first show that we had a good answer to this: “What can a drone company learn from a flashcard app company?” If that’s not crystal clear, it’ll be hard to get people to “show up” and contribute — whether in-person or virtually.

To get you started, consider looking at investment stage, industry, geography, company size, or any number of other factors to find “clusters” of people with shared interests. Once you’ve identified a “critical mass” point, you can then determine the right tool for the cause. It might be Slack. It might be a Google Group. Or it might be something completely different.

Well, you might. We certainly did. Today, we have 3,600 people in one massive Slack channel from across our portfolio. The problem is, like any online tool or community, a group like this takes a lot of effective moderation to get right. To be honest, we haven’t sorted out the best way to unlock all of the potential that Slack has to offer for our community yet. We’ve tried a lot: Dozens of topic-specific channels, regular moderation and touchpoints, even custom a custom SlackBot to introduce itself to people in the network. While we’ve seen upticks in engagement here and there, you really have to step back and ask yourself, “What behaviors are we trying to optimize for here? How do we know this is really making a dent for our community?”

We haven’t given up on this outlet yet, but it’s also not the strongest tie our community has to each other. With any new interaction model that you’re hoping to unveil, just be sure to consider the carrying cost of upkeep and maintenance for that system.

If you have the right critical mass, commitment, and support, I believe a strong platform strategy can impact many dozens of companies simultaneously. This can be incredibly rewarding for both you and the entrepreneurial community that you serve. But there’s no, “one size fits all” model to platform. Investing in any network or community is a commitment that takes time, consistency, and intentional experimentation to get right. In my opinion, the payoff is pretty great, but I guess that’s up for you to decide?

And by the way — the good news is, there’s a lot more information available today about how to think about this in a smart way, including:

• Serve your VC Network (part two of a three-part series by former USV GM, Brittany Laughlin)

• What to consider before building your platform strategy (a helpful starter kit guide by Kim Pham)

• The rise of platform in venture capital (podcast worth a listen featuring Stephanie Manning of Lerer Hippeau)

• Director of platform: What does that mean (an overview on the role by Lindsay Knight of Chicago Ventures)

• The rise of “the platform” for venture capital funds (Forbes piece, quotes lots of great folks)

Originally published at Dry Erase.