Making Sound Investments with Ashton Kutcher and Effie Epstein (Sound Ventures) | Summary and Q&A

Summary

In this video, Fef Sanguino, the managing partner at Sound Ventures, and Ashton Kutcher, founder of Sound Ventures and a well-known actor, discuss their experience as investors in the technology industry. They talk about the qualities they look for in founders, the signals they consider in the market, the potential of different cities as startup hubs, the importance of storytelling, the MeToo movement, the future of Twitter, and advice for celebrities entering the venture capital world.

Questions & Answers

Q: How would you describe Ashton Kutcher as an investor?

Fef describes Ashton as "scary smart" and "analytical," with a unique ability to cut through the noise and identify valuable opportunities. She emphasizes his ability to understand market signals and his industry-agnostic approach, which focuses on investing in great entrepreneurs.

Q: What signals is the market currently sending?

Fef explains that their investment strategy is flexible, allowing them to stay agile and opportunistic. They believe that the next great idea will not fit neatly into a PowerPoint presentation, so they focus on being open and receptive to the ever-evolving market landscape.

Q: What advancements are they seeing in the direct-to-consumer (D2C) space?

They have seen a burst of companies in the D2C space, but not all of them have a market advantage. Companies that only rely on brand differentiation may stumble, as there is a misconception that engineering Instagram alone guarantees success. However, some companies in this space do have a market wedge and the ability to create consumer traction and network effects.

Q: How do they approach investing in different industries and sectors?

Sound Ventures takes a broad market approach and looks for intangibles. They seek opportunities where there is a little discomfort and constraints that breed creativity. They also pay attention to where talent is going and the industries that attract the most talented people. They aim to be industry-agnostic and focus on the potential of the founders and their visions.

Q: How do they identify the next big thing in the market?

Ashton explains that their job as investors is not to know what the next big thing is but rather to identify it when they see it. They look for founders who have a deep understanding and strategic advantage in their respective industries. They also analyze market signals and trends, such as the value of technology platforms and robust databases, to anticipate shifts in the market.

Q: Have they ever been tempted to become entrepreneurs themselves?

Ashton admits that he has been tempted but recognizes the importance of being rigorous and critical about his own ideas. He highlights the difficulty of running the same rigorous process against one's own ideas as it is to evaluate others' ideas. He believes in seeking feedback and advice from trusted colleagues before making any entrepreneurial decisions.

Q: What cities are emerging as promising startup hubs?

Fef mentions several cities that have emerged in their pipeline - Boston, Austin, Miami, Nashville, and Seattle. She also mentions Denver and Austin as cities where they have seen promising companies, and she believes that the democratization of baseline software tools allows companies to thrive in various locations.

Q: How do they view the growth of the tech industry in Los Angeles compared to San Francisco?

Ashton and Fef highlight the significant increase in venture capital going into Los Angeles in recent years. They note that LA has experienced a doubling in funded companies, but the number of exits has remained relatively stable. However, they believe that talent retention has improved in LA, with technical talent now having more options and companies being able to relocate engineering teams from Northern California.

Q: How do they evaluate the valuation and pitch of founders, especially female founders?

Fef acknowledges that female founders tend to be more conservative in their pitches and valuations compared to male founders. However, they value self-awareness, followership, and the ability to sell the idea more than the specific numbers. They believe that having a clear vision and attracting talented individuals to the team are crucial factors in evaluating founders.

Q: How important is storytelling in pitching and investing?

Ashton emphasizes the importance of being able to sell the idea when pitching and to convince potential employees to join the company. He believes that storytelling is a critical skill for entrepreneurs and that their ability to inspire and attract talent will contribute to the success of the company. Fef adds that storytelling is essential but cautions against being too confident or cocky in pitching, emphasizing the need for humility and openness to learning.

Q: How do they view the MeToo movement in Hollywood and Silicon Valley?

Ashton acknowledges the need for men to listen and learn from women's experiences, highlighting the importance of action rather than words. He emphasizes the need for equality and fairness in the workplace and supports initiatives that promote equal opportunities for women. Fef expresses her belief in the power of self-awareness and the importance of attracting and retaining diverse talent in organizations.

Q: If Ashton were on the Twitter board, what advice would he give to Jack Dorsey?

Ashton suggests that Twitter should provide users with the option to segment their audience based on their interests, allowing for a more tailored and filtered experience for both users and followers. He believes that not everyone wants to see all aspects of an individual's tweets, and segmentation could lead to a better user experience on the platform.

Q: What advice do they have for celebrities wanting to enter the venture capital world?

Ashton advises aspiring investors, whether celebrities or not, to do the work and gain experience. He emphasizes the importance of building pattern recognition, understanding competitive landscapes, and identifying outstanding entrepreneurs. Fef adds that self-awareness, followership, and the ability to attract and retain talented individuals are qualities they look for in founders.

Q: In terms of regulations and public sentiment, how do Ashton and Fef view Bird's approach compared to Uber's approach in dealing with governments?

Ashton believes that Bird is playing it right by acknowledging the changes required and working with regulators and the public to find suitable solutions. He criticizes the focus on suppressing the freedom of citizens, highlighting the benefits of scooter-sharing in terms of energy consumption, emissions, and overall convenience. He urges regulators to have a balanced perspective and not hinder progress towards a better world.

Takeaways

Ashton and Fef emphasize the importance of being analytical, open-minded, and open to change in the ever-evolving technology industry. They encourage founders to have a clear vision, be able to sell their ideas, and surround themselves with talented individuals. They believe in the power of storytelling and the need for self-awareness and followership. They advocate for equal opportunities and diversity in the workplace. They also support innovative approaches to regulations that promote progress and positive change. Overall, their advice is to put in the hard work, learn from mistakes, and focus on creating a better future through technology.