EP. 16 - S.C. Moatti, Might Capital - How To Build and Invest in Products that Count

✅ Hey guys! Enjoy this EPIC interview w/ My good Friend, S.C. Moatti! S.C. takes us all the way back to her early days at Facebook and shares with us her backstory which ultimately shaped her career and her future!🙌 S.C. shares TONS of gems in this one! What is your favorite lesson from this interview?! Let us know in the comment section below!


Rishi Sharma: [00:00:00] So welcome se really excited to have you here with

[00:00:04] SC MOATI: [00:00:04] us. Thank you so much for having me, I'm looking forward to this discussion.

[00:00:10]Rishi Sharma: [00:00:10] so I'd just like to get the, yes, a little bit of background on yourself. So if you could just go into your background and kind of, and just brief cliff notes, what your journey from, from the beginning to what led you to become an angel investor and working with

[00:00:24] SC MOATI: [00:00:24] founders.

[00:00:26] Yes for sure. I, I have an engineering background, electrical engineering, an MBA, and then I spent a dozen years building products and companies. I worked for Facebook, Nokia, SQL systems. And then when I was at Facebook, two things happened. One is I started angel investing and got some early success and, and enjoy doing it.

[00:00:49] And then two, I was invited to write a book. On what makes a great product. As I was writing this book, I realized that there was no place for product managers to stay sharp, basically learn best practices from one another. And so I started with today five years later is one of the largest networks of product managers in the world.

[00:01:13] And this network. Is a network of innovators, people who build great products, but also ended up starting great companies, working for great companies. And so a lot of the companies we invest in, they come to us through that product network products that counts.

[00:01:32] Rishi Sharma: [00:01:32] Nice. Nice. Thank you for, for that bringing us that background.

[00:01:35] So if you could, just for the audience that might not know what is product management, and how, what would be the most easiest way to

[00:01:41] SC MOATI: [00:01:41] explain that? well, it, it's really interesting because, you know, it's, it's not an easy answer and depending on which company you work for, which industry you're in.

[00:01:53] Yeah, there's going to be different titles, different definition for the role. Some people call it brand manager, product measure, product marketing, product designer, product dice, not so different things. Technical product measure. the truth is a product manager is basically somebody who's responsible for orchestrating.

[00:02:15] Many many different kinds of resources and drive success for their product and successes also interesting, like how do you define product success? Because, you know, for a lot of people and especially for a startup at my D capital night, my venture capital firm, we see a lot of founders who come to us and say, I'm looking for, you know, what they call product market fit, or I reached product market fit.

[00:02:42] And I think of product market fit really more as a mist. I mean, it's, it's cool, but you know, the truth is there, isn't such a thing as like product market fit, like the minute you reach product market fit. You're going to use it right away because some customers are going to make demands that is going to change your product.

[00:03:02] And therefore you're going to create, you know, unhappy customers gain more customers, and you're going to be constantly looking to evolve your product market fit. So what I think of as product success is really what ultimately. Is the success of the business, which is drive revenue, build products that make money.

[00:03:22] Yes. That simple.

[00:03:25] Rishi Sharma: [00:03:25] Yeah. I think a lot of the biggest principles and ended up being that, just that simple. so I'll take it to another, maybe something that might not have an easy answer also, is what makes a great product. If you could

[00:03:37] SC MOATI: [00:03:37] summarize that. You're you're asking me all the, all the tough questions.

[00:03:41] So as they say, a great product is really interesting because you know, some people will have a sense, certain sensitivity. They will like say, Oh yeah, this is a beautiful product. Like the iPhone is a great example of that. Like, Oh, I love this iPhone. It's a great product. So, and then other people will say, ah, no, I, I read on my case, not efficient.

[00:04:04] It consumes so much battery. I am not finding things easily. Like, you know, so I actually did a lot of, research on that thinking like what makes a great product. And I came down to something that also feels probably simple. It's like easy to understand. Are you hard to master? When we sync our technology, it's really become an extension of ourselves.

[00:04:29] And so when I think I want to build a great product. You want to say, I want to build a better person if I had, so what makes a great person is really the question? What makes a great product is really what makes a great person. And when you look out there and like for frameworks that describe a great person, there's actually not too many.

[00:04:49]and so I use the mind, body spirit framework to describe that and apply that to product. So, you know, what makes a great product is. First of all the, the body rule we all want to do good. So we expect that our technology and our products will, will operate by beauty. And what does that mean? It's not just, you know, pretty pictures.

[00:05:09] It's a lot more than this than spirits. We all want to have a meaningful life. And so we expect that our products will also be meaningful. I E they will be personalized. And then lastly, mind rule, like your listeners, you and myself, we all want to keep growing and learning. And so we expect that our products and our technology will also learn and evolve with us.

[00:05:33] And then, you know, of course that's like the tip of the iceberg in terms of answer, but that's, that's what I think of as a great product.

[00:05:41] Rishi Sharma: [00:05:41] That's, that's a great way of approaching it. I think it's quite unique and I think it allows you to, make the products more human. integrate better into your life, which builds habits, which make, make products that you want to keep back, coming back to.

[00:05:56] So that's, that's a great framework. so, you know, move away from product management, kind of go into that of angel investing. obviously this isn't current situation we're in right now. We're in COVID, people are sheltering at home. There's also civil unrest currently going on. so how just generally is the.

[00:06:13] The market generally for investments right now for startups.

[00:06:18] SC MOATI: [00:06:18] Yes. So I, I realized that at the beginning, I didn't really tell you about my venture capital from my D capital. And so maybe, let me say a few words about it because they will help give us perspective on where I think. Venture capital is going.

[00:06:36] So it might account for all what we, we're a venture capital firm. And what we offer to our portfolio companies is access to the products that count metric that means access to over 300,000 product managers. That's one in five in the world. And then the reason I mentioned that is that, you know, right now I think what's happening in the venture capital industry.

[00:07:01] Is, there's an innovator's dilemma situation. You know, it's like 10 something years ago when I looked for Nokia and the iPhone got introduced at Nokia, the rage was, Hey, we need higher resolution cameras. And then Apple came in and said, it's not about the camera. It's about having an app store. And it's about having iTunes.

[00:07:23] That's what's going to make the next wave of, you know, great mobile. applications and they were right. And right now in venture capital, there's something exactly similar that's happening, where all the big firms you see SoftBank and and many others, we gotta raise more money. So we grade bigger checks.

[00:07:42] Otherwise we're going to die. Right? It's the same, same thing to get bigger. If we want to survive the partner, when you do this, is that the more money you invest? The more you dilute your returns. I mean, we're seeing it right now. We self bank and revel. And so what mighty capital and a few other firms are doing is saying, it's actually not about the size of your check.

[00:08:04] It's about the value you bring to the table. That's not the money. And so mighty capital writes a check, of course we're investors, but we also add that value of the product management network and our portfolio companies like we're investors in Airbnb and digital ocean amplitude, mission, bio and amplitude.

[00:08:24] For example, they say we've generated millions of dollars in revenue from giving them access to our network. Right? So when you find an investor that add millions of dollars to your revenue, that's a very valuable. It's value way beyond the dollars that they invest. And so that's, you know, that's what I think is happening right now to kind of a macro level in venture capital.

[00:08:46] Now, back to your question about like, okay, but we're in COVID time, civil unrest, it's like the crazy opportunity of our lifetime. What it does situations like this, as you, as you can tell from what's going on in the news, it just accelerates. Macro trends. And so we were already seeing equalities rising.

[00:09:06] Well, now it's like just crazy accelerating. We have 40 million and employed by that's like 25% of the population is out of a job. Well, it, it was, it was already written in the cards when. You know, people make like a hundred times more money than, than, you know, people leaving right next to them. And so, what's happening in the venture capital industry is, is the same, like these funds that keep getting bigger and bigger.

[00:09:33] They're eventually like is, are going to see their downfall because they're never going to be able to deliver the returns that are required for, you know, for them to raise another fund and another kind of friend William marriage. And I think value capital as value added funds is going to be one of them.

[00:09:53] Rishi Sharma: [00:09:53] That's a kind of way of talking about it. So now that we're kind of, since you mentioned, everything's kind of on an accelerating. This next wave of startups that are going to come, what do you feel is going to be the successful ingredients of them? Is it going to be the time trust, time, tested

[00:10:12] SC MOATI: [00:10:12] ingredients?

[00:10:14] Yeah. So say it, same thing in the, in the world of innovation, right? Like innovation just keeps accelerating. And so what we've been seeing over the past 10 years is really in essence, the mobile revolution. I mean, we've been seeing it first in the consumer sector. Then in B2B and SAS now we're seeing it in life sciences and deeper industries.

[00:10:37] So it's just keeps getting deeper and deeper in the different levels of our economy. That's not going to go away. So there's still gonna be massive disruption coming from this mobile data set like mobile data said, I defined by every piece of data that's collected out there. like context, time, place that we can use to better personalize services.

[00:11:02] Now there's another body of data that has not yet been exploited or is just starting to be floated, which is all the data set that's inside ourselves. Basically, I call that. The genomic status said, but you know, I also include like your dental footprint, your eye, you know, your biometrics, right? So everything, that's your house and genomics data.

[00:11:26] We have not yet built the crazy consumer B to B life science services that are going to be just as disruptive as the mobile services are disruptive today. Okay. And then there's a third body of data further down the line. That's the blockchain body of data. And the blockchain body of data is about connections between people and entities are the five start a company.

[00:11:52] Or if I enter into a partnership with you, like how do we, how do we. Quantify that relationship. And I think blockchain is going to be the way we qualify it. So when I think about waves of innovation in the, you know, in the next like 10, 15 years, I think. Mobile body of data, genomics or biometrics, body of data, blockchain, body of data.

[00:12:19] And then there's a whole other area around IOT robotics, like the, you know, space exploration, which I'm a lot less familiar with, but it's also huge, right? The, that area is another kind of huge wave of disruption.

[00:12:35] Rishi Sharma: [00:12:35] Thank you for breaking that down. so, you know, you've even mentioned some of the companies you invested in like Airbnb digital ocean.

[00:12:43] What are you looking for when you're going in on an investment? What are the criteria that mighty careful,

[00:12:48] SC MOATI: [00:12:48] sweetie sample? What we want is founders who are very business minded. So we want them to have assembled a fabulous team. East coast, West coast is where we like to invest. And then we want them to generate a little bit of revenue out of these companies.

[00:13:08] You can definitely contact me and I leave you my email. Mighty.capital, no.com mighty.capital.

[00:13:17] Rishi Sharma: [00:13:17] We'll put that in the show notes so that any listeners out there, and, you know, is beyond, is there any other trends that you say that are kind of out there in regards to the investing community? that's kind of changing right now, any and how the approach has changed.

[00:13:34] SC MOATI: [00:13:34] Yes, I think there's something else that's happening. In addition to that innovator's dilemma, right? I mentioned how the big firms are not, on a sustainable trajectory. The very small firms aren't either on a sustainable trajectory and why that is like. Over the past, whatever, five, 10 years, we've seen a lot of IPOs.

[00:13:53] And so we've seen a lot of people come out of, you know, whatever Uber, Facebook, and so on and so forth and say, well, I'm going to start my own venture fund. And you know, they go and they raise money. And when people ask them like, well, why should I invest in you as an investor? Well, their answer in essence, you know, is well because I have a net, right?

[00:14:16] So it's basically like you, you should invest in me because it's me, which is not a good reason to give somebody, like, to trust somebody with their money. Right? Like good reasons are I'm going to make you more money than anybody else. And here's my track record for, I have a unique differentiator, which is very hard to replicate and gives me access to three deals.

[00:14:39] These are good LR. I have a great brand that is detracting and entrepreneurs. These are valued reasons, but you know, saying, Hey, I was early at Uber. Therefore you should invest. Therefore you should invest in me or therefore you should take my money. If you're an entrepreneur, these are no good reasons.

[00:14:55] And so in a, in a downturn. All of these, you know, small, you know, call that super angel or, you know, me, myself and I type of situation are going to go away as well. And so if you're an entrepreneur and you're trying to raise money, you know, I like to think of investors are as coming in straight difficult kinds.

[00:15:16] Like for venture capital, you have the whales or the massive funds. That you know, are, are endangered because they get too big. Then you have the dolphins, the dolphins being. The funds that add value, right? Like you swim with the dolphins because they help you navigate some treacherous waters, which mighty capital I think is one of them.

[00:15:39] And then you have the minnows, the very tiny fish who may or may not survive. Like it's just going to be attrition there. And so if you're an entrepreneur and you're trying to raise money, make sure you try to identify dolphins. Right, firms that have the sustainable competitive advantage and will carry you through the downturn that is any other firm.

[00:16:01] Good.

[00:16:02] Rishi Sharma: [00:16:02] Those are, those are some great tips. So just a follow up question. So since you mentioned, and you've mentioned several times, do you think the whales in this co in this metaphor are gonna go away because not gonna be able to get the returns? Does that mean that you see a lot of the startups that would have maybe stayed out of the public markets for a lot longer as they go away will now go public sooner?

[00:16:27] SC MOATI: [00:16:27] So they may or may not all go away, you know, for example, a bank may go away say Korea is unlikely to go away, right. So it's not black and white, but, what do I think is the impact on liquidity? I think what's going to happen. And we're already seeing that is the IPO window is going to close for awhile.

[00:16:49] But there are still a lot of companies that will be going IPO. You know, if she, if you look at who's in the starting blocks, Robin hood and Airbnb and digital ocean, and many, many of them, they're still going to go public maybe next year or maybe delayed, but they're still going to be, going IPO. the smaller companies.

[00:17:13] You know, if you have a company that has maybe $10 million in revenue right now, my recommendation for you is either try to exit like ASAP, like sell yourself soon four for a good price and started another company or plan on taking your company all the way to IQ, which is a mature risk here. Value proposition.

[00:17:38] And if I were an entrepreneur today, it's one of the best times to start a company right now. So if I had a business and I could sell it now I would sell it and started another company.

[00:17:51] Rishi Sharma: [00:17:51] That's great. That's great advice for entrepreneurs that are listening. And, do you feel, you know, in regards to like, meant to getting rid of back to liquidity, how.

[00:18:00] SC MOATI: [00:18:00] As

[00:18:00] Rishi Sharma: [00:18:00] a lot of asset classes are kind of being very, have been volatile. Some equities initially took a massive hit. Now they've come roaring back. other, other argues segments are also still struggling. do you see any pressure or change in relative to LPs out there that are funding these funds? Any, any difference there?

[00:18:19]that's out there.

[00:18:21] SC MOATI: [00:18:21] Okay. I stopped trying to understand the stock market, to be honest with you. I understand that the private markets, because they're very much driven by business fundamentals. I understand real estate market because you know why they're also driven by, by, Economic indicator. There's there's a lagging factor in, okay.

[00:18:40] I get that stock market it's you know, not my echo fatigue. So as far as your question, how do like larger limited partners react in a market like this? Just like every other industry, what you see is the market heaters. There's TD opportunity. They're like, Oh, what, everybody's frozen and waiting for things to kind of go back back, quote, unquote, back to normal, which they never do.

[00:19:09] I'm going to take advantage and I'm going to place my bets in brand new ways. Try some reinventing myself because I'm a market theater. Therefore I have to drive the conversation and then everybody else is like frozen and they're gonna wait then. See what the market leaders figure out. And then once they figure it out, they'll say, Oh look, well, let's continue to follow the market leader because that's when we do

[00:19:34] Rishi Sharma: [00:19:34] that makes a lot of sense.

[00:19:35] And then final question regards to startups. You know, with this whole movement, that of work from home. and a lot of companies have already mentioned that they're going to make it a permanent case or create permanent availability to do so. How do you see that impacting the startup community or where you potentially would look for deals or where employee base would be?

[00:19:56] What's the impact of the work from home movement?

[00:20:00] SC MOATI: [00:20:00] Yeah. So two things on that one, I think working from home, forever is not sustainable, you know, pupil, and you can see it from the, the crazy stuff that's happening right now and all the curfew, right. People want to be connected. People want are social creatures.

[00:20:17] So there's going to be a back to where there's going to be an enjoyment of the office. And yes, people who are at risk may work from home for longer periods than people who aren't. But people will eventually go back to the office. However, the nature of the office may change a little bit in that it may be more distributed.

[00:20:38] My people realize that, okay, we may benefit from having a ma a main office and bringing people to the office area likely, but also having people like in maybe less expensive locations than New York and San Francisco, which was already happening before, you know, many of the winners we invest in. They take advantage of some arbitrage in, in resources and cost this way.

[00:21:02] So I think it will just accentuate that, but I don't believe in any of the theories that, Oh, everybody's going to work from home forever. I don't think that's sustainable. If you have kids, you already know it's not sustainable.

[00:21:14] Rishi Sharma: [00:21:14] Yeah, no, I think I've heard that many from a lot of my friends that have to have children.

[00:21:18] It's a, it's a quite difficult task to manage. so just want to move on to the final questions. So, we like to ask each of our guests breakdowns. Morning routines are routines and rituals that they have in their daily life that allow them to be successful or make the change that they do on a daily basis.

[00:21:36] Is there any particular routines or morning routines or rituals, that allow you to be successful on a day to day basis?

[00:21:43] SC MOATI: [00:21:43] Yes my morning and my evening routines are our keys to success. A morning routine is a lot about health, so I'll, I'll exercise. I'll meditate every morning, I even for a few minutes and then I'll be sure to catch up on all the news.

[00:22:01] And I don't check the news until the evening. so that's sort of the, the morning. And then in the evening, I'll I'll, I'll have a break and I'll, I'll generally have a break relatively early in the evening, like in, you know, I mean, after working hours, like five to seven or something like that, and I'll, you know, hang out with my husband, we'll have dinner, I'll play game, read a magazine, do something that's really a change of pace.

[00:22:29] Won't think about work at all. And then maybe I go back to it, but that long break, like a two hour, just like, do not saying recharge very important.

[00:22:42] Rishi Sharma: [00:22:42] Thank you for things written down for the meditation. Is there a particular app or practice that you do and the audience might be

[00:22:48] SC MOATI: [00:22:48] interested in that? Yes, it's actually something recent.

[00:22:52] You know, it's interesting because I think we, as people, we are our worst critic. And so my meditation I do in, in very, it's a very short meditation, but it's three steps. The first step is, I, I know it's going to come across a little awkward, but if you try it, you'll, you'll see incredible benefits. I tell myself, I have this visualization for myself.

[00:23:18] I'll tell myself, like you're an athlete, for example, cause I'm trying to work out. I'm trying to be better with my health. So I'll project it to what I don't believe to be true today. Like today I don't see myself as an athlete. but if I keep exercising and projecting, then maybe I'll become an athlete myself.

[00:23:38] So you're an athlete or you're a thought leader, or, you know, things like that that, you know, I think are aspirational for myself. And most of the time doing that first part is a negotiation of the SI negotiating with yourself. The meditation is quite uncomfortable because you don't believe what you tell yourself.

[00:23:59] And so I'll do that. And then I'll switch to gratitude practice where I'll say, I'm, you know, I'm grateful for you. All the things I can think of in my life. And then after these two, I'll sit in silence for a couple of minutes. And so that's my meditation practice.

[00:24:15] Rishi Sharma: [00:24:15] Thank you. Thank you for breaking that down with him to be hopeful for the audience.

[00:24:18]so moving to the next question, what does personal care mean to you?

[00:24:23] SC MOATI: [00:24:23] Oh, personal care is, I actually, for the past two, three years as our business has been exploding, I have put a lot more attention on the personal care. And so it's really about what you eat, how well you exercise and how you sleep.

[00:24:40] There's another component people like to bring in, which is about stress management. But from my perspective, like as long as you do these three, you eat well, sleep well, exercise enough. that that's really what it means.

[00:24:53] Rishi Sharma: [00:24:53] Thank you. Thank you for breaking that down. And, is there something currently, new that you're exploring, that's kind of taking your time with just very fascinated with maybe something that you've recently become aware of?

[00:25:06] SC MOATI: [00:25:06] Yeah, so, there are two books that I read in the last week that I started were very, very relevant and useful that I think could be useful to your audience and entrepreneurs. One is called the big leap. And the big leap. If you're not familiar with it talks about how you can operate in one of three zones, you can operate in your zone of competence, which is you do a good job and, you know, life is good enough kind of thing.

[00:25:33] Or you can operate in your zone of excellence, which is wow. I found a niche where I'm really good at, and I get paid a ton of money to do it, even though I may not enjoy it. Or maybe not enjoy it anymore. And then you can operate in your zone of genius, which is Joni like highly uncomfortable, but also extremely rewarding.

[00:25:53]and so I would, you know, I would, I would encourage you to read that book and to strive to offer it in your zone of genius and whatever that is. And then the other book that I've read, it's a little more tactical then, you know, these big concepts is, is about, marketing and launching products. I'm always hungry for this kinds of books, these kinds of books.

[00:26:13] And, the book that I'm reading recently is called marketing made simple, which is a. Dead simple, as it says way to launch products and drive revenue for products, and the officer does a phenomenal job outlining and very simple, you know, step by step approach to, to launching products. So I recommend that book.

[00:26:35] Rishi Sharma: [00:26:35] Do you think permission, I'll put that on the show notes. and then final question. if you were to have a dinner party and you can invite three guests dead or alive to, to attend the dinner party, who would you invite and why? Oh,

[00:26:48] SC MOATI: [00:26:48] God. Okay. So first guests that would invite dead Joan of arc. Like pioneer of, you know, women tower, like, you know, amazing and gets burned at the stake for it.

[00:27:04] Like if I could resist to tater, I definitely have her for dinner. Second guests, I would say Michael Jackson, you know, I, I think she just really revolutionized music in the nineties or whatever. And, and, and for, for the long, long term and then third guests, Hmm. that's a really good question. I would say, maybe Christine lifeguard or someone like this, who's really sort of.

[00:27:34] Bridging, you know, business and policy and well, geopolitics five thing. To, to give me a bit of insights on like what's going on in our crazy world right now.

[00:27:46] Rishi Sharma: [00:27:46] Yeah, no, that that'd be very interesting. A dinner party to have all those different perspectives. So it's a good selections. so just finally, if the audience wanted to connect with you, what's the best way to connect, connect, or

[00:27:59] SC MOATI: [00:27:59] email me is S T my D capital.

[00:28:04] Rishi Sharma: [00:28:04] All right. That's perfect. Thank you for taking the time to be on the podcast. I think the audience learned a lot, so thank you.

[00:28:11] SC MOATI: [00:28:11] Thank you for having me.

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