Mission-Driven Founders, Global Investing, and Canva (with Wesley Chan)
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All right, well, hello, everyone. And what a beautiful stage we've got here and a beautiful venue. So thanks to the Web Summit team. Wesley, great to be here with you. It's exciting to be here. Well, my first question, because I know the topic today is technically something about being a global VC in a remote world. So let's start there and then kind of see where the conversation goes.

You've been a global VC for quite a while now, and I'm thinking specifically of Canva, which is a name a lot of folks will know. Can you tell the story of how you came to be an early investor there? Yeah, Canva is an amazing company. Mel and Cliff are two of the most thoughtful and wise founders I've ever had the opportunity to work with. But it was completely non-obvious when I, along with my team at Felisa, led the Series A.

And it's one of those things where when we led the Series A and we showed up at their office, there was an introduction from the CEO of CultureAmp, who I had joined the board of in Melbourne. And he said, you've got to meet these two founders, Cliff and Mel. They're amazing. They're starting this design company that no one really knows about right now, but you should see them. So I got this introduction.

from Didier at Culture Imp. We had a board meeting in Melbourne and I was on my way back to Sydney because you can't connect directly to San Francisco from Melbourne. And I set up a time with Cliff and Mel and they're like, come by the office. We've got this fun little place. Come see us. And so I had this half hour of coffee booked with them at their office en route to the airport. I literally brought

my bags with me and wheeled it into the office. And Cliff and Mel come down. I don't think either of them were wearing shoes at this point. And they had all these engineers running around, also without shoes. I'm like, I'm at a strange barefoot place. Like they just had come back from the beach.

And they went on to describe Canva to me. It was the absolutely most incredible thing. Mel said, I'm going to change the world of design. There's a hundred different tools that you need when you want to go make business cards, PowerPoint decks. Like you have to learn Photoshop. You have to learn this printing tool. You have to learn Microsoft Office. And she said, I'm going to combine them all into one tool. And they had not turned on monetization yet. There was some money they were making selling graphics and fonts.

But they said, you know, this is going to be the biggest thing on the planet. And I remember just listening to their vision and could not stop being mesmerized by some of the things they told me. And so my half hour meeting turned into three hours with them. And I missed my flight back to San Francisco. That was the probably most interesting thing. I was like, oh, crap, I'm going to miss the flight. And they're like, oh, come stay with us and learn more. And so they invited me back the next day and then the following day.

And I spent three days with them in Sydney understanding product. Have you spent three straight days in diligence with the company before? No, it wasn't diligence. That's the thing. I wasn't planning investing. Investigating the investment opportunity. I just liked hanging out with them because they were thoughtful, smart, and their engineers and their product designers were some of the most interesting people on the planet, right? And a lot of them had come from Google in Australia, had helped build a lot of the Maps products in Australia, and they just, you know, was hungry.

They were just super hungry for information. So that was just very, very interesting. And I had spent 10 years of my life building product at Google, 15 years there. And it was one of these amazing things where we got to share knowledge with each other about how they saw the world, how I saw the world. And I helped them figure out how to do hiring for product managers and engineers. And at the end, they said, we'd love to find a way to work with you some more. And I was like, well, I don't know. It's hard for me to bring back a company with no revenue leading a series A.

And the difficult thing about the deal was they made it very easy to say no, right? It was a romantically involved team. Cliff and Mel were dating, which is a big no-no in venture capital. You never want to invest in teams where the founders are romantically involved because if they fight,

It's a disaster, right? The whole company has to deal with it. There's already enough risks in these businesses. You don't need to introduce that. Yeah, they had not turned on monetization. They said, we love our company too much to give up a board seat right now at this time, so no board seat for you, no 20%. It was every rule in venture capital that I had the break to go get this deal done. And my partners, they were supportive of it in the end, but at the beginning when I said, I think I want to go do this deal with this team in Australia, they're like, you already did one. Don't do two.

Like, that's a lot of risk for you to be doing more companies far away. And I said, there's something special about this. It reminds me of the old days of Google, the barefoot engineers, the people running around, the founders holding every Friday a big team meeting with the whole company in all hands, where they are absolutely transparent about the major decisions they want to make. It was just absolutely fascinating. And I saw all these parallels from the old days of Google, where when I joined, there was a--

hundred people or so. And was the pushback from your partners in part because, well, now you have to be on a plane to Australia for multiple board meetings rather than just one company's board meeting? No, I think the pushback is that when something goes wrong,

Back then, the traditional venture orthodoxy was you want to be able to bike to your company or at least drive there within 10 minutes of where you lived or where you worked. And the reason for that is you want to help out, you want to roll up your sleeves, you want to help them hire. I didn't have a competitive advantage in Australia. I didn't know how to hire engineers. I couldn't hire product managers. I didn't know where the best schools were. Now, I was on a board in Australia, so I was going there anyways. So my argument was, I'm already doing one. Two is a two. Why not two?

And to be fair, they supported this at the end. They were very supportive of wanting to go do this, but at the beginning it was one of those things where it was kind of scratch your head, what are you doing for a second company? And today, that's probably one of the most legendary companies. The last round was done at $40 billion. We've done the Series A and the Series C. We have a board seat today, which is great. And that's a billion with a B, a private company valued at $40 billion. Yeah, that's a billion with a B. And our position is worth several billion, which is incredible, right? And a $100 million fund that returns 20x plus,

the fund, if not more. And one company just shows you how powerful this power law business of venture capital is.

Mel says she's only 1% of the way there. I mean, for a founder that says I want to build a company that lasts multiple centuries and we're only 1% of the way there, she says my vision is to get every internet user on Canva. I want 100% of the internet on Canva. Today we have less than 1%. So I'm less than 1% of the way there. And for most people that are using it, they understand how critical need this tool is. The pandemic helped people share more, create more, design more.

Half the decks that I'm getting now used to be created in PowerPoint or Docs, and now they're being sent to me in Canva because Canva has a share feature. And the decks flow beautifully. You can do animations. You can do videos. I mean, it's incredible. And so it's one of these things where I'm getting--

all this distraction using it. I'm not even asking for it. And I don't think people are sending it to me because I'm on the board. People are sending it to me because it's the easiest thing to use. So you're seeing the growth of this company worldwide. And they're at over a billion dollars of annualized revenue today. Billion of ARR. I've never seen anything like it.

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So I want to wind the clock back and imagine a different version of the universe. Imagine a parallel universe where COVID happened twice.

at the time you were meeting the company. So you weren't in Australia, you were doing meetings over Zoom. Do you think you would have ended up making the investment if it was just a Zoom call versus actually flying across the pond? Yeah, the answer would be no. I mean, I'll be completely honest. It wasn't until I saw the company and was there and spent, you know, even the first three hour meeting was absolutely incredible, but you have to see their energy, their passion,

You have to look them in the eye and go, why are you doing this? And it's really hard to do that over Zoom. I know everybody talks about, oh, I've been able to do these 20-minute Zoom meetings, and then two hours later, there's a term sheet. And there's something to be said for that. But I don't think anyone would have truly appreciated how amazing Canva was. The numbers weren't there to do the investment, right? I don't think any firm would have said, these are top growth numbers for us to lean in.

Mel presents really well whether it's over video or whether it's in person, but unless you see the company up front and you see how passionate, there's two types of founders.

And I've been lucky enough to invest in the first type, which is what I call the missionary founders. They sit there and they believe in what they're doing. They're purpose driven. Their whole company is purpose driven. I call them missionaries because everybody takes the biggest sign of a missionary company is everybody's working for half the pay they would get at Google or Facebook. They so believe in the mission and the long-term optimization of getting wealthy and changing the world, getting wealthy long-term and changing the world that they're all in. They'll work seven days a week and they believe clearly that

they're doing something that matters in their life. It's purposeful. And the easiest measurement of this is, you know, looking at the regrettable attrition numbers. A lot of my companies that don't have

mission-driven purposes or have missionary founders have northwards in this great resignation of 25 to 30 percent regrettable attrition. A third of the company is leaving now, especially in light of the pandemic where everybody sits there and goes, you know, I've been working at home. I've been stuck in this thing. I don't know if I want to be spending my time at this crazy company. And then you look at Canva and the regrettable attrition rate is under 2 percent. That's incredible. They're one-tenth of what the regrettable attrition of many of these companies. No one leaves.

And that's because everybody is so excited about being there and working in a purpose-driven company that the only attrition are people that don't fit the culture. And so you can just tell these sort of missionary founders. The other type of company are the mercenary companies, right? Where you have mercenary founders. Everybody's motivated by money.

or they're motivated by whatever economics that they need. So they're optimizing for the short term. And those mercenary companies don't tend to do well for me. I tend to avoid them. And so that's like the one thing that served me really well is spending time on investing in companies where there's truly a missionary founder and they were able to recruit a bunch of missionaries alongside to go on this journey with them to change the world. Yeah. Yeah.

By the way, that's a hard thing to tell over Zoom. Everybody would tell you that they're missionary, right? And that's exactly that. Yeah, it's really interesting that we're in this business in venture capital of identifying outliers and betting on them. You know, it's the classic, you have to be non-consensus and right. And it's interesting now that we have this lower fidelity mechanism of evaluating companies over Zoom, it's probably harder to pick up if something is a four standard deviation type of founder.

It's not lost on me. I only did one or two deals over Zoom, right? Because I sit there and I'm going, I can't tell this is a four standard or five standard deviation company. And everybody else is chasing Zoom, right? I'm sending the market out a little bit right now because I just say, you know, I think at

at some point I'll be able to get on airplanes again and find the canvas. And I'd rather spend my time with Cliff and Mel than with some random enterprise software company where everybody's motivated by money, where everybody's chasing it. There's an old saying Charlie Munger sort of had is, and Warren Buffett said this too, right? If you do what everybody else does, you get what everybody else gets. And I want to be a venture capitalist that is one of these five standard deviations, and I've been able to do it so far, right? I have 19 unicorns now because I find these founders...

that are just truly missionary driven and tell me with a straight face that they're going to be the five standard deviation founder, they're changing the world and they believe in it and they're building a baby. Their baby will grow up to be 200 years old. It's very rare that you see a founder. Last time I saw this outside of Canva was with like...

Larry and Sergey, who said, "I'm building a company to last a millennium. I have a thousand-year plan." Cliff and Mel, same thing, "I have a thousand-year plan." And you sit there, and it's truly incredible when you find founders that truly believe that rather than tell you that because they think you want to hear this. Most of the companies that have become these great unicorns that are going to return multiples of the fund are founders that believe that they're going to build a company that lasts at least a century. And that's one of those things I look for.

So, I'm going to pitch you my startup. Are you telling me I should not have an exit strategy slide in my deck? Well, I mean, you know, there are VCs and probably, you know, I was at a conference in a room full of them that will be happy to see your exit strategy. I see that and I'm just like, oh, well, good luck. Yeah. Yeah. Yeah, I mean, it's, I like the notion of a founder VC fit the same way that there's product market fit.

Yeah, I mean, look, some of the most incredible companies I've had the privilege of investing in, Flexport, you know, the company's worth, you know, billions of dollars today. It was one of the first checks.

into that company. The founder literally told me, it's like, "Wesley, don't invest in me if you want to click flip. I'm building something that will last a couple centuries. I'm changing the world of freight and shipping. It's such a mess today." And he did it. He's on the progress of doing this. Half the companies we use are in Flexport today, if not more. You look at Gusto, right? Same thing with the founder. He's like, "It's going to take me four years to even get any traction."

If you're not in on this journey, don't join. And now there was Northwoods of 10 billion, right? Another massive multiple fund returner. And it's one of these things where you truly want these founders that are sitting there going, I'm going to change the world because I really truly believe in my mission. And a lot of people will tell you this. I believe in the mission. This is great. And then you sort of

Ask them, well, how long until you exit? And they're like, oh, three years. I'm going to sell to Google. And you sit there and it's like, how do you have a mission if your goal is to sell to Google in three years? Google's not going to support your mission. They're going to support themselves. And so the truly exceptional outcomes are from these companies and founders that really truly have a group of people that are just in on mission, all in. And I'm an investor in CultureAmp, right, where they're the Google Analytics for employee happiness. And the happiest employees are ones, there's this very strong correlation between happiness

and believing in the purpose of what you're doing. Purpose gives people happiness. It is one of those things where when you truly believe, it doesn't matter how low they're paying you, how little options they're making, it turns out the best companies that are purpose-driven give lots of equity and very little salary, right? That's another interesting correlation. The founder's able to talk all these people in coming. In fact, when I joined Google, I was a starting engineer, getting paid under 80,000 a year, which sounds like a lot of money for a fresh out of college, but today a starting engineer gets paid northwards of 200,000.

And so we were getting this low pay, but we got lots of equity because Larry said, "I don't want anyone to join me for the money. If you are here for the money, you don't belong." And so he filtered out everybody that was in it for the money or needed to go do a bunch of things for the money upfront. And we had no idea what the equity was worth because of the dot-com crash. But I still remember working seven days a week there with this amazing group of people who said, "We're going to change the world." And Google is a different company today than what it was

20 years ago, but it was one of those things where I remember those first hundred people were all in on the mission. And that pattern recognition sort of survives, and it's something I look for in the companies I work with today. - So it sounds like the dominant way that you evaluate whether you want to invest in a company is if the founder is obsessed with the mission,

Where does the rubber need to meet the road for you in terms of will this market materialize? Because I can be really mission driven about selling number eight pencils.

to dogs. I'm trying to scope a market here pretty small here on stage. But where does it get interesting to you where you're like, wow, Ben is really obsessed with that mission and it's big. So the thing that really pushes me over the cliff to do the investment is simple. You have clarity of vision. If you're selling pencils to dogs, right?

What's your clarity of vision? I simply ask you, well, if you're going to be around for a century, you've got to make a profit. What's your vision for this? And you sit there like, well, I'll just go into the Web Summit and market to dogs and hope I get something. That's not clarity. That's a dream, right? And so if you talk to Mel at Canva, her vision was absolutely clear. We're going to sit there and get into every school. It's going to take 10 plus years.

We brought Guy Kawasaki on board who orchestrated, God, when I left college 20-some years ago, Windows had a 90% market share. And Guy Kawasaki had orchestrated putting Macs in every school in the world. Like, I grew up using Macs in high school and elementary school, even in college, right? MIT, where I went to school, was a lot of Macs because Guy had...

basically discounted the Macs or gave them away at cost to students. And we all said, this is great. This is easy to use. Much more better than Windows. And despite that, I had a brief stint at Microsoft where there was an incredible amount of people using Windows. Had 90% market share. And today Macs have 90% market share because there's this long game, right? That guy helped orchestrate for Steve Jobs. And he's involved in Canva. It's in the hands of every school kid. This might be a 10-year journey. But, you know, she had this clarity of vision. The culture...

founders, clarity of vision, gusto, clarity of vision, right? We're going to do X. And if we do these following steps, it will work. And so the people, the founders who believe in the mission also, you know, have thought through this so much because every day and night they think they sit there dreaming about this. It keeps them up at night. And so they come and say, here are the steps. The steps may not be right. It might be completely different than what actually happens in reality, but they have a vision in their head. That's very, very clear. The

The founders that say they have a mission or they believe in a mission but don't really believe in it, they haven't thought about it that much. They're telling me what I want to hear. That clarity of vision isn't there. And so if it is number two pencils to dogs, fantastic. Just tell me what you're...

what you're going to do to get there. And I'll support it. And sometimes I'll make a bet on it that sounds completely crazy, right? Like, if you think about it, I have a company called Overture Life, right? This is completely off the bat. This founder, Martin Verzosky, he's based out of Spain. Again, away off the beaten path. He's the chairman of Prelude, which is the largest chain of IVF clinics. But he's creating a robot to do IVF

He says, "I see the problem. Here's how I'm going to create the robot. Here's where the errors are." It turns out when you stick the needle into the embryo, do the genetic testing to make sure the embryo is viable and there's no genetic defects, that causes the embryo to split and creates twins. That's why there's so many outcomes of twins.

I have this way to look at the leaky DNA and reconstruct the DNA to figure out the genetic defects. It's called cell-free DNA. I don't have to poke a needle in there and there's no risk of this splitting into twins. I mean, think about this, right? That one single step will eliminate this error that cost people all this money and have all these complications in terms of how IVF works. But he's simplified another 30 steps of it to remove this human error. And you sit there and you see this clarity of vision and you say, "I got to get on board." And it's working. He's got a bunch of prototypes working. It sounds nuts, right?

But this guy has such clear vision and he has such clear mission and he has built such a team that's willing to work for half the pay to follow him into this journey. It's nothing short of incredible. And those are the companies I love investing in. And to every other VC, it sounds like I have been the crazy nut job who's pitching some science fiction crazy wackadoo stuff

And I'm willing to say yes. And who knows? If it works out, I get another Canva. Well, the good news is we're in the business of saying yes when everyone else is saying no. That makes it really fun. So I think the thing I'll leave everybody with, I don't care where the company is. India and China I won't touch.

because there's some wild west stuff going on there and you know you don't want to look at the president the wrong way and have your company taken away but everywhere else wherever founders are you know and they have this crazy mission in this crazy division you know i'm i'm a big fan and i'm more likely to say yes than not so that's you know the the secret of how we sort of do global investing which ties back to our lovely theme i love it thanks so much thank you this has been fun thanks