We are continuing with our ex-VC spin on the profile series. This time, we spoke with Kevin Costa, who had a successful investment career at La Famiglia VC before moving into the startup world, where he is currently the Chief of Staff at PetsApp. In our interview, Kevin talks about: his journey at La Famiglia VC, three types of VCs, Slow-Twitch vs Fast-Twitch Capitalism in the VC vs the startup world,
and the strength of being an introvert.
For more on Slow-Twitch vs Fast-Twitch Capitalism, you can listen to Daniel Gross here: https://podclips.com/c/Z8Yy5m
AS: Hi, Kevin! Could we start with how you ended up breaking into the VC world and joining La Famiglia?
KC: I started with a degree in Business Administration, mostly because I wanted to keep my options open. During that time, I did a few internships in consulting and finance until eventually landing a startup internship in Berlin in Forto – a logistics tech business. I really enjoyed it, as I hate the corporate dynamics and I love moving quickly, so that environment really appealed to me. We were working on preparing materials for the board and raising our Series B, so we were really making everything look like exponential growth. So, one night, whilst preparing one of the decks, I asked myself whether I would be able to distinguish the good companies and the bullshit ones on the other side. Is everything really growing well or is the company struggling behind-the-scenes?
At the same time, several people told me that I should check out VC. Erik, co-founder and CTO of Forto mentioned to me that La Famiglia was looking for someone… So, it wasn’t really me badly wanting to break into VC, but rather out of serendipity. I got introduced and started out as an intern, which led to a full-time position. Overall, I would say that being in an Ops position in the startup world really helped.
AS: Awesome, and could you tell us more about your journey from being an intern all the way to leaving the VC world?
KC: For sure! I started as an intern, which was all about seeing the breadth of different companies. VC is one of the only jobs where you get paid to learn, next to academia; that was super interesting to me – doing due diligence, competitor and market analysis, and so on from the ground up. Plus, speaking with a lot of founders and operators, which is really the best way to learn, much better than all the courses and books. So, for the first 3-6 months, I was just learning about everything.
Then, when I transitioned into a full-time analyst role, it was about trying to cover the whole life-cycle of deals. You know, there are different types of VCs: there are great VCs who know everyone in a particular ecosystem and are good at sourcing, there are also those who pick very well, and those who win very well. So, you find yourself learning about these three types of VCs and choosing your individual edge as you start. It is a very competitive market, so you really need to learn how to bring value and differentiate.
AS: These are very interesting sets of skills that one can hone to find their niche as a VC! Upon reflection, what skills have been most useful to you?
KC: It depends on what you want to specialise in. I am very much non-technical, so I wanted to differentiate by being intellectually curious. I appreciate that it has become somewhat of a buzz word. To me, it is about talking to everyone, not just founders. I often differentiated myself by talking to the 5th or the 10th person in the company, such as VPs of Growth or Sales. These people are not being pinged as much, but they have great insights and know much more about the topic than you, which also gives you a great opportunity to learn. So, become interested and talk to everyone, not just the CEO, and try to build deep relationships there. I would also recommend asking whether you are really intellectually curious about the VC world and the verticals or do you just like the allure of the new Goldman Sachs that the VC brand is currently becoming? As Peter Thiel rightly says, if you follow the “hot-thing” like an MBA student, you’ll end up doing the wrong thing. At the end of the day, you have to follow what you think is interesting, you’ll probably find more there as there’s less competition.
Watch Peter Thiel’s Career Advice here:
https://www.youtube.com/watch?v=lxDApu-LXrE&t=61s
AS: So, if we take away the shiny wrapper of venture capitalism, and talk about the reality of the VC world, have there been any challenges or failures along your way?
KC: There are two things. In VC, you are constantly being exposed to phenomenal people who are revolutionising the world – you may talk to 2,000 companies a year; this is certainly a benefit, yet it also has a downside. Daniel Gross summarises it well with his two notions of Slow-Twitch Capitalism versus Fast-Twitch Capitalism. Essentially, Slow-Twitch Capitalism is the VC world due to the long feedback cycles where you make an investment and are only truly able to assess whether it was a good one 10-20 years later. So, if you are not good at being ultra-patient, it is challenging, as you do not get much feedback in the meantime. Bluntly, when you are young and at the start of your career, you have to commit for 15 years to even know if you are good at your job. You need really thick skin and the ability to turn the world off! It doesn’t matter who thinks what about the way you are investing…
Startups, on the other hand, represent Fast-Twitch Capitalism. You may have 6 months of runway left and, if you don’t hit a Sales or an MRR target, you are done. So, you can very quickly tell if someone is good: if a new person joins PetsApp, within a couple of weeks I can tell you whether they are an A+ player or not. So, from a very selfish perspective, that quick-feedback cycle is what I have been looking for at the start of my career. Also, I run a fund called Spheniscus Capital (spheniscus.capital) where we invest small angel tickets, and, having been in both the slow-twitch and the fast-twitch world, I think I am better equipped to provide more sincere feedback and a greater degree of empathy to the founders we back.
The second thing about VC for me was needing to have a look at my personality and to ask myself whether I like being a lone wolf, because that is all you do as a VC. You are in a room alone doing 12-15 calls a day and that’s how you stay on top of your game. I, personally, prefer team sports and I love the teamwork element in running a startup.
AS: The alone versus in a team image really sparked curiosity in me. You are describing speaking to people every day, yet finding yourself somehow alone at the same time. How does relationship-building and network-building differ in the VC and the startup world?
KC: I think it once again goes back to the type of VC that you want to be. You can be the guy who knows everyone or you can be the super-introverted one. There is this notion of VCs being social butterflies and extraverts, but some of the best investors with the best returns are very much introverts who lock themselves up for periods of time and just think about where they see the world heading. They read and think a lot, and then they find great companies that fit into this vision. They are not at social gatherings like Web Summit or Slush. That’s not where great returns necessarily are. So, if you are an introvert, lean into your strengths!
AS: Lastly, do you have a piece of advice for our students based on your journey?
KC: Ask yourself why you want to go into VC or work in a startup. Do you want to learn something over the next 3-5 years? Or are you in university looking at career paths that are most prestigious? I would say: go against the crowd. Don’t just follow what your parents want or what your peers are doing, find your passion. I would have studied Psychology or Philosophy instead of Business Administration, as that is what I genuinely love and read about all the time. Even if it is pottery for you, you will find a way to make a career out of it, because you will wake up every day loving your job. So, just be honest with yourself and do what you love.
AS: Thank you so much for your invaluable advice!
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