Aman Verjee: From PayPal CFO to secondary venture capital

welcome to another VC wisdom podcast with Aman ver with us today Aman is founder in general partner at practical Venture Capital PVC we're going to talk about SAS the economy e-commerce smmes venture capital Palo Alto and everything in between this pod is brought to you by my company it's called ppar.com if you want to start your own podcast can go to pod.com Aman welcome to the Pod

tell me a bit more about your and about PVC thank you good good to see you Charles and thanks for having me so practical venture capital is a secondary Venture Capital fund we are we've been around for about four years our strategy is to invest in funds that we like so we find funds that are performing well that are doing well typically they're concentrated in areas like

SAS or e-commerce which are areas where I've worked in in the past and in my prior my prior jobs my business partner is a gentleman named Dave McClure he has made thousands of investments in companies about 40 of them have become unicorns out of his portfolio he's the founder of founded startups so we have a lot of experience in running and managing funds that are in these

areas we find funds that we like we usually they're about five or 10 years old we we look at the portfolios based on what we think they're worth and we try to find sellers of those LP interests basically people are in those funds but who need liquidity typical Venture fund is 10 to 15 years now if you're a seed stage fund it takes over 10 years to get any money back so there are a lot of great companies that are private that are doing well that are growing that are profitable they're valuable but getting liquidity if you're an owner in those companies is increasingly difficult and if you're a fund who invests those companies it's doubly difficult and so by providing liquidity we can buy these great assets usually at discounts of 30 to 70%

on the fair value pretty significant I want to dive deep into your career because you had a wild ride to say the least um you got into Harvard how did that happen I uh so I was born in Kenya in East Africa my parents moved to Canada when I was a little itty bitty I was in first grade or something so six or seven years old and so I spent most of my um childhood in Vancouver and Toronto um I think my path at the time when you're an immigrant and you've just moved to a country like Canada uh my my background was uh East African but from their Indian you know Indian parents are very big into education at least they were at least mine were and so I always heard this message from

when I was a little kid like the only way you're going to get ahead the way that your life will be better than my life uh is through education so I think I internally thought um education was very important to me and was it was important to my family my family didn't have a particularly strong view about Harvard or the top American University so I think I

came to that on my own and uh but it's time I was a teenager i' kind of had my site set on Harvard Stanford Princeton Yale I really wanted to go to a top American University because I thought they were the best universities in in the world and I guess I still do um my backup would have been University of Toronto my mother would have been great with the University of Toronto was right down the street but I had my you know I had my sight set on the American universities um I loved America and still do really loved everything it represented and stood for and kind of knew from a a very early age I wanted to go and and live in the United States and and probably work on Wall Street someday so

I had my chart you know my path charted out pretty um pretty uh clearly from the time I was very young and part of that was going to the best universities that I could find and so I was lucky enough to go to Stanford and Harvard right and then you started in finance Leeman Brothers uh that is before they failed uh it was in 98 that GE there McKenzie Co so classic uh Consulting paths there which I love talking with X McKenzies because they have keen mind for business and then the most uh notable one so PayPal so you were there almost like in the Elon days I mean Elon was uh fired by the board before that uh but you were there from 2002 to 2008 so quite a significant period what did you

accomplish in your time there as a VP yes so at Stanford I actually met Peter teal before he was Peter teal I mean he was Peter teal but this is before he founded PayPal and before he' really done anything that you'd know him for he was at Stanford University in the uh late 80s early 90s and he was at the law school when I was undergrad um one of the great things he did was he founded a school newspaper called the Stanford review there was like a right leaning right of Center libertarian campus newspaper still around today I'm still chairman of the board of the review i l the paper I was an uh writer uh editor and then became editor and Chief and Peter was on the on the board so he he and

I got to know each other in the mid 1990s at at Stanford um around and then when I graduate from Stanford I I went to work on Wall Street which is what I wanted to do Peter tried to talk me out of it and uh tried to convince me to join his hedge fund and then he started PayPal but it was so early for PayPal I didn't really have a feel for like what is this company what what problem does it solve I don't understand it internet and payments I'm not sure so I turned him down the first two times that he asked for me to to work for him but um I while I was at when I finished my stint on Wall Street I went to Harvard Law I came to Silicon Valley

and worked at PayPal for about three weeks and helped to write the S1 so the first document you file when you go public is the S1 and this was in 99 2000 when they were trying to figure out if it can go public um that didn't happen until 2002 but they needed someone to draft the S1 so that was that was me and and worked with Peter a little bit of with Elon and the team there um and then in 2002 after I graduated I became a full-time PayPal employee by then they were public already they had been figured out they figured out their business model they were um transacting payments on the eBay platform so making money making profit growing very well and so I ended up spending um seven years at PayPal my

very first job there was like the junior guy in the IPO deal team um my last job seven years later was running Finance for PayPal so I had the um the privilege of working with that team and doing all their budget setting and ran the strategy group and uh you know helped them to to uh create this this tremendous very valuable franchise Peter teal What's um Maverick

um a lot of people don't like him from being such a clear thinker and saying the truths that most people don't see I'm certainly one of his fan mostly um love his Keen mind and his strategic mind what did you learn from working with Peter I really enj still do learn from him uh every time we interact I just think he is a um what I like about him is um he is an exceptionally clear thinker he's got his own view of the world he is um and he's very good about one how he expresses himself and then just two how he relates to people if you don't like them I suspect you've never met him you know because that that probably tells people who do interact with them in fact if you talk to

all the early employees people work for him I just asked how do you how did you like working for Peter there are not many people who would say I didn't like I didn't like working for him um the culture that he created at PayPal was it was meritocratic it was very uh driven very substantive you could have arguments you could agree to disagree but then once we

committed to a strategy you walked out of the room just everybody felt like they're on the same page I always felt like I could approach him and have a direct conversation with them didn't matter you know rank or title or where you were in the organization I think he he gave a lot of great people opportunities to express their ideas um built a really incredible team you

know that that early PayPal team was Peter teal Elon Musk it had U Max lein and Roloff B Roloff is now the head of seoa the general partner Imaging partner there um it had David saxs who is the you know founded and sold Yammer and is now the craft Ventures uh Reed Hoffman Keith raboy who's now Coastal Adventures just a tremendous you know and there's a whole

bunch of people I haven't even mentioned who've gone on to do great things and found great companies so the people he was able to attract and bring in and that environment that he created was very very special and and very exceptional and I've always found him to be um you know a very thoughtful open-minded guy he's analytical he's data driven you can change his mind with information

he obviously has his point of view and depending on what you hear or how you hear it maybe you like him or maybe you don't but he's always to me in our interactions he's always been very open-minded fair you know very thoughtful so it seems to me that uh John donaho was at bayball and transferred into eBay you were there at the Meg uh Whitman days I

believe uh what did you learn at your time at eBay and working with these guys yeah both Meg and John Meg was there earlier she was their CEO of eBay when they acquired PayPal and then um John came in later and he came in on the eBay side on the eBay Marketplace side so it was never a uh a pallion what uh Meg was a very good I I found her to be a very good operator like she had the ability to grow and scale that business in a way that I think the the prior founding Team without her probably couldn't have done um she was also I think an ex Management Consultant but as was as was John but maybe unlike a lot of management Consultants like really good at like setting priorities executing

getting stuff done um and she I gota give her a lot of credit she scaled that business in a in a tremendous way and took eBay to the to the next level um John came in around I want to say 2005 U and I worked pretty closely with him I think his strengths were he was a very good strategist and he was able to think about how to organize a like a large company in in a way that I learned a lot from I did find the environment to be I guess it was a large company it was very political a lot of silos had had built up you know there was like duplicate effort being done um I didn't I didn't love that but I think to his credit John understood that and also

understood the the need to to uh delayer the organization he was very aggressive I think in 20089 on headcount reductions which we' never seen I mean growing up in the valley in 2001 2002 I guess you would have seen it in 20201 but really when I joined we had six7 eight years so like rapid growth and um I think I'll learned from him hey you got to think about getting efficiency and being able to really focus on what metrics matter and you know in his case his big contribution that I that I saw was one just the cost cost getting ours run cost structure the eBay Marketplace business and eBay Inc but also very customer focused uh I remember him um up until then all of our bonuses have been paid based on earnings per

share like did you hit your numbers every quarter or not and if you did if EPS was above the threshold you got your bonus and if it was way above you got a bigger bonus and if it didn't make it which we always hit our numbers up in those days then you didn't get a bonus he was the first one who said I'm not going to just goal you based on earnings per share I want to goal you a net promoter score so what do our customers say about us and our customers happier every quarter or not because if they're not especially at the VP level then we're not doing our job so he began to incorporate customer metrics as a as a bonus goal and I began to really think about you know bonus

goals how these incentives flow to the employees how to get everyone aligned I think he was a big um he shaped my thinking on that a lot and Bol company gave you stocks that must have turned out pretty good for you over the years yeah PayPal they did PayPal in 2002 went public I think at A1 and a half billion dollar valuation um and today they're worth

I don't know 70 75 billion so the good news for for those employees was they you know I I was I luckily I held my shares and didn't sell them at the IPO because I you know I was working there so I wanted to have part of that ride but a lot of PayPal's value was created as a public company like 74 75th of their value today is came as a public company um that's not the case today right A lot of these unicorns and private companies are they create a lot of the value in the private market and then there's not a whole lot left for the public market but is different Dynamic but PayPal and eBay too were very aggressive users of stock comp to motivate people right and you occupied um very

important roles at these companies I think it's important to mention so CFO North America marketplaces at eBay so two billion in Revenue then Sonos um somewhat familiar with Sonos a Speaker Company you helped uh for a series D of 135 million so I guess that was was the biggest amount you've raised for companies you worked at right yes yeah when I joined Sonos I was their CFO

in uh so that was after I left eBay that was my first full-time CFO job of an independent company um and I just love their I love their wireless sound technology I remember meeting with the CF the CEO the first day of the the the job interview in Santa Barbara and um you know he was um I remember how the interview went he he sat me down in his office we talked about finance and what does the CFO do and it was all fine and about 35 40 minutes in I thought I thought it was going well this is going well and began asking me about my childhood and where I grew up and I was like well I grew up in Toronto and he said okay uh and he began fiddling with his phone

and I said oh this is you know okay this is a bit weird he's like distracted or he's like multitasking or I don't know what I thought the interview was going well maybe it's not going so well um and about a minute later I start hearing like a radio station and I'm like what that's interesting why is there music playing uh that's kind of annoying maybe you

know maybe maybe he'll turn it off in a second maybe that's an accident and I'm recognize wait a second I know that station I know that I know that DJ I know that call sign and it was like you know it was basically was like 99.9 chfm in Toronto and John's looking at me the CEO and I'm like is that what is that my is that a Toronto radio station here in Santa Barbara California he's like yes I'm like how did you do that he's like let me show you what Sonos can do he can stream music this is like at the time nobody could think you know nobody thought you can stream music from another city into a you know into a into a place in California like we're still using CDs and cassette

tapes back then and he's like streaming music from my childhood radio station because they're you know they're streaming online and I recognize what Sonos can do it can connect people to music you know different music Services streaming music at the touch of a button um you can increase the volume with the slider bar up and down and you can you can you can find radio stations that

you grow up with or you can find a radio station you know in like anara or like you know Radio free Moscow or whatever you want to through all these different music Services all through these Wireless Systems I thought this is pretty this is pretty amazing this is pretty life-changing for you know for 2010 or 11 it actually one of the more impressive demos have ever been

in and it took him like a minute which is funny right because it was loading and stuff like that it he probably did it it felt like a minute I guess he had a find the Toronto radio he knew where I grew up around when so I guess he put you know if he figured out from his search what what radio station I probably like to listen to he knew that I like classic rock and I think he very quickly found you know something that I connected to from my childhood which was pretty impressive from his iPhone 5 or something like that that that's beautiful um okay then Visto amazing company too but I want to talk about uh being COO of 500 startups like that was I believe your first coo position and that

one falls falls outside of the CFO pattern how did you get there what did you learn with working over 2,000 portfolio companies well this was uh I had done three I guess even four stfo jobs and you know been in finance for 15 years by the time I got there so I think I was at the I was a point where I'm not sure what else I could learn in the finance track I was having fun doing it I enjoyed the CFO RS some of them worked out some of them didn't work out but I think I was also ready you know to and to try something new and take a new chapter um my current partner Dave McClure was the CEO of founded startups and so he he had come to me before he

had said look if you ever want to leave the finance realm and go into investing please come work with me um he's a two-time member of the fors Midas list he's made you know tons of very successful Investments so working for him as an investor was a great place to to go and we had that prior relationship and he had a portfolio that was over 2,000 companies

we had employees in for 25 different countries and investments in probably 75 different countries and thousands and thousands of Investments and so just being able to organize all the information around portfolio companies I was on the chair of the investment committee so we had to build an accelerator program that was investing in 30 to 50 companies every quarter um we did that in two batches here in

Silicon Valley we were also doing it in Latin America we had um a couple in the Middle East so it was just a you know it was a lot of fun being able to travel around the world and then the biggest for me the operational part of it and putting together the funds and the portfolios was fine but just meeting these entrepreneurs from all over the world mostly seed and series a entrepreneurs was um was pretty amazing you know how they how they found opportunities how they exec an opportunities what they were thinking about in their different regions um how we as an investor could identify Arbitrage in different parts of the world with the valuations were better um that was just a tremendously fun experience and it's something I still lean on today as

an investor with Dave seems that you had like an exceptional career you know you're a money-making machine what are your flaws my career career flaws personal flaws all of them that's a good second a question um I think what um what I've Loved about my career is uh the the ability to learn from I'm a I'm good at finance and good at analytics and I've always love

to sort of see business through that lens um that gets hard to do at the early stage so as you try to work with entrepreneurs who are very early in their Journey I've recognized that these like the financial models and the the business valuations they do don't really make sense in any any way that a trained Economist or financier would would understand um and so I think

relating to early companies and finding value I mean Dave is exceptionally good at it and so I learned from him every day like I can't do that at the level that that he does I don't have I guess that imagination to sort of see where this can where this can play out somehow other investors I've met in the area have more of a intuitive sense of it um I think that's been that's still a bit of learning experience but you know one of the things you do in a career is like you build one chapter after the next after the next and so if you if these things are interesting to you you just have to kind of learn to learn to figure out what you're weak at and then you know how to overcome

it or surround yourself with people who are who are really good um I think the M the other you know the on the personal side I left the fact that I have um two wonderful kids they're 12 and 10 both both girls I really do think I'm a great father I'm a leanin kind of father I'm like coach of their soccer team coach of their baseball team very involved with their school work and their academics and um you know I'm I'm loving where that relationship is with the with the kids I do think I had a you know you had to make choices I think as you progress in life and you have to decide whether you're going to be great at work which is if you're a CFO it's a lot of work um

you can be a great father but that's also a lot of work and you got to take time away from the job to be good with the kids and then you have a spouse and a marriage and you know you got to be a good husband and a good partner I I think I'm probably two out of three I think I'm very good on the career side uh I think I'm a great father um I had a great marriage 15year marriage didn't uh didn't you know it's over now but I'm in a very good place with a very uh good relationship with my ex but you know to be honest I've had to rate myself like maybe I wasn't the best husband in the world and you know you you I think you have to

make these trade-offs and recognize it's just hard to go three for three and then you got to take care of yourself and go to the gym and you got to work out and then you know and you got to be four for four and I don't think anyone you know is good at all four things all the time I think there are maybe phases in my life where I could have been good at one then good at the next and good at the next but uh I think when I you know especially when I Mentor people and talk to them now I always tell them don't try to do if you you have to recognize you got to make these trade-offs if you're gonna be if you're not going to be a great dad because

you don't spend the time that's okay like lots of great people aren't great fathers right and you just focus on your work and maybe be a great spouse or take care yourself and you know what the kids will probably be fine because they maybe have a great mom or um you have help and so that's that's okay but I think a lot of people maybe even particularly

a lot of women think they have to do it all and you got to be a great CEO and a great mom and then you feel guilty when you can't go to the gym and I think I really try to give up on being being four out of four if I can be two out of four um and I'm really you know I'm being honest like if I had to look back at my life now and say hey I really dropped the ball and being a father I think I'd be pretty bummed out about that I think if I if I look back and say hey I wasn't the best husband of the world you know I've kind of learned to live with that and uh and so you begin to you think about choosing

your battles and really focus on what you want to do so anyway I think I've made peace with those flaws but that's just the way that I've I've thought about it as I've progressed my career well you're four out of four uh or five out of five with uh being honest and um Senor situation as as it is um till is good at that too you know I I say that you're not kidding yourself and that's really good I I think that's one of the top traits of being a good VC and being a good founder you know you're not kidding yourself you're honest with yourself and that's a really hard trait now with um Sports you know I think people can hack it um for example I live in the mountains here in in

Waka Mexico and I just go for a run uphill for 30 minutes with my dogs and I can even listen to an audio book a VC audio book or startup book although I would never listen to those um because they're not that good uh but yeah I'm trying to hack that and now with my children's it's a very odd strategy but I don't think I'll send them to University and the classic education system which I very much despise because I think it makes you know it's a mold um although Harvard is different right like Harvard is is top education top teachers um most of the time that is but I I would educate them here here and they would actually you know mimic pretty much what I'm doing until they can start their Ventures at

like 10: and hopefully be profitable by 15 is that naive strategy I think it depends um a lot on the kid so I have I have moved a lot on this so remember what I said when I first came to Canada right or wrong my head was the only way I'll get ahead is through education because that's what everyone in my community did and that was very much like you got to go to college got to go go a four-year degree um I remember having a conversation with my parents before I went to private school I I applied to private school it was a really good school like a college prep school um and it was $2,200 a year Canadian and my parents were like that's a lot of money for us I don't think

we can afford that if you really want to go you're gonna have to work jobs and pay it off and maybe we can make it make it happen but $2,200 was a lot of money and I took it you know very seriously um and then I went to school and I did degrees that paid off and I paid off my school loans and so I never ended up in debt I teach at Harvard now business school and so I see kids coming in and these kids are $50 $200,000 in debt you know they didn't go to Great universities um they majored in I don't know film studies or or African-American studies or something where I'm like how do you pay that kind of debt off and um the quality of education is good at Harvard

but at the same time for a lot of the kids I don't think they're $200,000 in debt good I think they can get a lot of those experiences working for someone like Peter teal at a venture fund or working in a job um they can take coding classes now without paying these you know these exorbitant fees to the universities and have real practical skills so I think

now versus 20 years ago if I had to do it again I'm not sure I would follow the path that I did uh I might follow the path you you know you'd like your kids to to follow and I think more than like if I had to guess my my 10-year-old when she was ready to go to college I don't know about her specifically but half of her friends are going to be like I don't want to go to university right away I might try to do something like what you just said start a company work at a startup you know learn in a in a job and then uh build my skills from there take some coding classes learn travel the world and then and then I'll see if I need to go get

a four-year degree in you know in something I certainly wouldn't advise going and getting that degree in English literature or something like that I would definitely focus on a practical skill that you can really use so I think you know but it depends a lot on the kid so my my path would be different from my daughters your kids will be different from you the most important

thing is what's right for the kid and how are they going to learn in the best way and I i' I've see it kids at Harvard today don't learn what they should they don't come to class um you know they're not getting the full benefit of what that education can get I'm amazed I I lecture there guest lecture there I'm amazed that 30% of students don't show up to class in a lot of days and like how can that be if I'm paying 60,000 a year I would at least show up to class and take notes and memorize everything that the guy says because otherwise why may paying all this money you know but a lot of kids take it for granted and um and that's un fortunate so I I think you're you know

I I just counsel you just do what's right for your kid and and it's very specific to that that individual child and that path may be very different than you know than what a lot of people think yeah just I mean didn't they check your LinkedIn two seconds you know like you're you're a freaking star I mean you won't say that out loud but I can say it for you and anyone skipping your class I mean I don't know what to tell them you know like I wish I would have have folks like you to teach me when I was younger um I mean Nobel Prize winners who teach economics at Harvard and and so forget about skipping my class you want skip my class I guess that's okay but you got a chance to

learn from some wonderful professors who are like writing the textbooks on economics and yet 20 to 30% routinely don't show up and you know it can tell from the grades they get and the the exams they give they're not getting you know they're not putting in uh the the kind of effort that I would expect now a lot of kids do and lot get a lot of great stuff out of it but I'd say that's there's at least 20 to 30% that I don't understand what they're doing there yeah and I mean Zuck was a nice inspiration for the startup world but yeah you're not like a Zuck necessarily plus the market conditions are very different from his time there's way more competition in most Fields so um yeah they should definitely attend a bit

more uh in that very specific case I want to do a round two that would be more focused on PVC stuff uh but for now until then am man where can people find out more about you well the um easiest way is uh is from our our website um pratical vc.com has like just an update on the fund and team bios and and uh stuff that we're doing we have a lot of information and blog posts that are that are posted there um and information about webinars and other things that we do that's probably the best place to go