Author: Nataraj Sindam

In this episode of the Startup Project, host Nataraj sits down with Aviel Ginzburg, a central figure in the Pacific Northwest’s tech scene. Aviel’s journey is deeply intertwined with Seattle’s startup evolution, from founding Simply Measured (acquired by Sprout Social) to his roles as Managing Director at Amazon’s Alexa Accelerator and now General Partner at Founders Co-op. He offers a candid look into the world of early-stage investing, sharing how his perspective has shifted from focusing on product to understanding the founder’s core motivations—often finding success in those who are ‘irreparably broken’ and driven by an innate need to build. Aviel also discusses the recent volatility in the venture market and introduces Foundations, his new community-focused initiative designed to be an anchor for Seattle’s startup ecosystem, aiming to foster the collaboration and serendipity needed for the next wave of innovation.

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Nataraj: Hello everyone, welcome to Startup Project. I am your host Natraj. Today my guest is Aviel Ginzburg, founder of Simply Measured, which was acquired by Sprout Social. He was managing director at Amazon’s Alexa Accelerator, he’s also a general partner at Founders Co-op, and he’s now co-founder of Foundations, which is a shared workspace and accelerator, an anchor to Seattle’s VC ecosystem, or trying to be.

Aviel Ginzburg: Exactly. The way that you’re answering it shows the work that we need to do. We’re defining it right now as an invite-only community of founders in the startup ecosystem. It has one part that looks like an accelerator and one part that looks like a co-working space, and we’re going to do a better job of explaining what it is as we figure it out ourselves in 2025.

Nataraj: We’ll get to Seattle Foundations and everything about it. A good place to start this conversation would be with Chris DeVore, your partner from Founders Co-op. He was on one of the best episodes of Startup Project. We had a really great conversation, and I’ve been following Founders Co-op’s work and Chris DeVore for a while. How did you get to start working with him?

Aviel Ginzburg: For better or worse, my entire career has been wrapped around Founders Co-op and has involved Chris. I graduated college in ’07, at the beginning of the Great Recession. I knew I wanted to do something in tech, maybe tech and finance. I was from the East Coast, and the plan was to go to New York. Then everything just went to shit. All of my peers who were graduating were having their jobs pulled. So I had been building small website businesses to pay my bills in college, and I just said, okay, let’s go all in and do this.

So a buddy and I decided to found a company. Before we closed on the friends and family money, I realized very quickly that we were about to lose all of it because we had no idea how to actually start a startup. We were reading TechCrunch and thinking, let’s do that, but neither of us had worked at one. We hadn’t even really talked to someone who had been there and done that. So I said, I have to go West and see what this is like. I didn’t know anyone in SF, but I had one good high school friend at Microsoft, so I wound up in Seattle not knowing anyone.

Less than a week after I started, there was a startup weekend. Back then, everybody would get in a room and build together. There were 150 people from early Amazon, Microsoft, and the budding Seattle startup ecosystem. It was like, okay, let’s pick an idea, form divisions, and all build together. It’s insane to get 150 people to work on the same thing at once. It’s a complete shit show. But I raised my hand and said, I’m a designer, I’ll lead the design department. Was I a designer? I don’t know, but I was more confident than everyone else who said they were.

So I found myself rubbing shoulders with what eventually became the who’s who of the Seattle tech community. Out of that, I landed a job at a company called Aperture, which was funded by Founders Co-op and Madrona. Within two weeks of arriving in Seattle, I was right in the middle of that community, so I got to know Chris. He knew my plan was always to start a company. I was clear with the founders that this was for me to learn and there was nothing they could do to keep me.

I was lucky enough to watch that business work. I think so many people start their career at a startup that goes nowhere or at a big company where you’re stuck in a tiny hole. I was able to write code, design products, talk to customers, and act as a product manager. When I felt I had enough confidence, paired with the fact that I think what makes founders founders is that they just can’t not start something, I started working on nights and weekends with my best friend, hacking together anything we could with Twitter data and Facebook data. So I said, it’s time to go off and start a company, but I don’t know exactly what it’s going to be. Chris and his then partner, Andy, said, we like you, you should do it, we’ll just write you a check. We incorporated as Untitled Startup, which was the precursor to Simply Measured. Chris made me put together a pitch deck that he ripped to shreds and made me feel like he wasn’t going to invest, but he did anyway.

So I transitioned from an early employee to founding CEO, which then transitioned into head of product and engineering. But I was finding that I was much more interested in the zero-to-one of things—going from idea to MVP to customer traction. So I was naturally spending more time with Chris and Founders Co-op. I found myself wrapped up as a pseudo-venture partner, which turned formally into a venture partner in 2014. Then, when we sold Simply Measured, I transitioned into a GP role. It has been 17 years of working every possible seat inside of the Founders Co-op portfolio. Now, it’s just Chris and I working together and investing in new companies.

Nataraj: So talk to me a little bit about what Founders Co-op is doing right now. Are you actively investing? At what stage and what type of checks are you writing?

Aviel Ginzburg: We are at the tail end of our fifth fund, which is a $50 million fund. The average check size is about a million to a million and a half, investing in pre-seeds and seeds in the Pacific Northwest mostly. COVID sort of screws up what geography really means, but we find that we gravitate towards founders who are culturally Seattle. That means you learned how to build at an Amazon or a Microsoft and you gravitate more towards unsexy business workflow problems rather than flashy consumer products. We’ll be doing the first close of our next fund within the next month and are actively deploying. The thing about us is neither of us are finance people. We’re both founders ourselves. We never worked at a larger venture firm. We have no associates. We act very much like a startup itself. Our process feels more like interacting with a former founder who’s deploying his own capital into really early-stage things that they find interesting.

Nataraj: One thing you mentioned on a podcast was that you did these things overlapping—you were an investor while you were a founder. I can relate to doing multiple things. I invest, I work at a big company, and I do a podcast. Talk to me about how your thesis of investing and finding companies evolved.

Aviel Ginzburg: When I was starting to make investment decisions as part of Founders Co-op, I was still actively operating. I was anchoring too much on product and on what I would do if I was running the company. I was thinking way too much about the product, the customers, and the opportunity rather than the founder. That was a hard lesson to learn because I invested in a couple of companies and watched as their direct competitor became a monster. I knew that was going to be a thing, but what I really messed up is that the only thing that really matters is the people. I just did not yet have the pattern matching to know what behaviors and motivations make a great founder. So much of success is about luck and upcoming challenges that you aren’t expecting. I was bringing my perspective of, I know what good product looks like, I know how to take things to market. Frankly, that initially made me a bad investor.

Nataraj: Right now in AI, you see certain types of companies will succeed, but now you have five competitors in the area. Who are you going to invest in?

Aviel Ginzburg: As a fund, I think you can run a strategy if you are a thematic fund with enough dollars and access. You can see everything in a space and pick the winner. It’s hard to do that at the pre-seed and seed stage. Ultimately, as a seed-stage investor, your job is to get really good at identifying a very specific type of founder and be good at knowing how to help them. Focus on those folks. Don’t feel FOMO about missing out on other things.

It’s embarrassing to look at what a lot of folks do. They’ll put out a whole thesis on AR/VR, then they’re a crypto fund, then an AI fund. Then you learn pretty quickly that a company did a 180-degree pivot after they invested, so the whole reason why it was in the fund is completely wrong. Ultimately, early-stage investing is like casino-level risk in people. The reason why it works is that you make enough investments that something does work and takes care of the rest. How you become good at it is through having enough experience with enough founders and seeing the movie play out enough times. I was part of the selection committee for Techstars Seattle from 2010 through 2020 as well, so I have seen thousands of companies from pitch to exit. Ultimately, when I look at a founder, I look at how they’re tackling an opportunity, the shape of the market, and the market opportunity. I can see all the different directions this can go. What you are underwriting is really just the human and the market they’re going after. That’s it.

Nataraj: You mentioned pattern matching. Are there any specific things that are deal-makers or breakers when you look at certain types of founders?

Aviel Ginzburg: Motivation matters a lot to me. Why are you doing this and where does your energy come from? A lot of times, the folks that have that infinite, renewable energy resource are those who are building something because there’s something broken in them. They’re just filling a leaky bucket for the rest of their life with creating something new. They find happiness and satisfaction in the work, in building, not in a specific technology or product. They just have to be putting something into the world or they’re falling apart. You work with crazy people, and I love that.

Mental health is a big factor. Depression is real, I’ve lived this as a founder—high highs, low lows. But your job is to ride that wave. You don’t want to find someone who gets one-shotted by finding peace and happiness and is no longer motivated. I’ve seen it happen where someone says, ‘I discovered the love of skiing, and now I have a family and I ski, and I’ve found balance in life and I no longer care if my company succeeds or not.’ You want to find founders who are irreparably broken, so they’re just going to keep charging forward and build. My bond with them is that I’m the same way. I’m not here giving you money trying to take advantage of what’s broken about you. I’m saying, I’m broken too, and living this path fulfills me. It can fulfill you too. Let’s go on it together.

Nataraj: That’s a pretty good way to put it. I grew up in India, and when I came to the US, I noticed a similar dynamic. Entrepreneurship in the US is so de-risked in a lot of ways. The only risk you’re taking is mostly on time. If you’re a developer at a big tech company, you should technically be doing a startup because it is de-risked. You will find some seed money eventually. The Indians who come here are a bit more broken by their childhood. They have more motivation. If you have a really stable childhood, that motivation doesn’t exist. They’re happy doing what they’re doing.

Some funds invested in narrow categories like AR/VR during the 2020-2022 period. It was a sign of so much capital that there were funds with inexperienced fund managers being created left and right. We created a lot more new funds which will never be successful.

Aviel Ginzburg: Money became functionally free. So you’re looking at, if money is free, where do I find alpha? When you run out of ideas, you say the best place to put that money is in the unknowable, in things that don’t exist yet. That led to an outrageous amount of first-time funds. A first-time VC is bringing their network with them. They haven’t yet saturated it. It’s all these amazing, smart people I know from my operating days, now let’s give them capital. Somebody can get $20 million and immediately deploy it into all these awesome-looking companies because they know the right people. An outsider looks and thinks, this person is a great investor. But you realize this isn’t really a venture capitalist; this is just someone with a great network who now has capital and just deployed it right into their network. They were not being thoughtful about if there is a real business. All that was also masked by markups.

The fun part is the excitement you get around a new idea. Then you invest, and it’s all downhill from there. Nothing ruins a good story like data. In the beginning, you’re going to the moon. Then you learn, this business is terrible, what was I thinking? You have this high, and then it goes to shit. That first investment meeting, you’re just wondering, what is this? You come into that first meeting thinking, how bad is it going to be? Then you build yourself out of the hole into a great company. That’s where the real work is. A lot of folks will not raise future funds. They’ve realized this isn’t that fun or enjoyable. The side effect is there are a lot of companies that raised money that shouldn’t have, and we’re still going through that pain.

Nataraj: I think the biggest distortion was the opportunity size. Every idea was exaggerated to be a billion-dollar opportunity.

Aviel Ginzburg: I would take that even further. People were saying there are $10 billion opportunities because unicorns went to decacorns. That started to make the model work. But if the company can only be worth $1 billion and you started at a $50 million pre-seed valuation, your fund is fucked at inception.

Nataraj: There’s also this winner’s bias. The winners became the Mag 7 and these trillion-dollar companies. So now everyone will say ‘trillion,’ and then you can justify a seed round of a billion dollars, which is happening with AI companies.

Aviel Ginzburg: There are some areas where there could be winner-take-all market opportunities. But I’ve also come to see over time this illusion that great companies have an arc that’s constantly up and to the right. Things move so fast these days that there are amazing companies where their enterprise value is high and then it goes to zero because the world moves. Part of your job is to invest in the company and know when to get out.

For example, we invested in a seed round of this company called Ally, which ended up selling to Microsoft. It was OKR software. We invested right before OKRs took off and before COVID, so there was this insane accelerant. We got approached by Microsoft for an acquisition. At the same time, we had a term sheet from a major fund offering $100 million at a billion-dollar valuation, even though we had single-digit ARR. We had many conversations with the founder about what’s the right way to go. We ended up selling to Microsoft.

Now, fast forward two and a half years. Microsoft acquired the product, put it into Microsoft Viva, and made it Viva Goals. Then they announced they’re just shutting it down because their strategy has shifted to co-pilots. They just don’t care anymore. Those two other competitors are functionally screwed. So, was that a bad investment? I underwrote a category that never came to exist. But one investment returned nearly a billion dollars and another similar one will return zero. Trying to reconcile that is crazy. You have to think about that sometimes, even in a great business, the local maximum may be the global maximum.

Nataraj: Let me ask you this, was that acquisition sort of a fund returner for your fund? So it was an easier decision for you from the perspective of the fund?

Aviel Ginzburg: As a seed investor, I was very aligned with the founder. It was a meaningful return rather than just another turn on capital.

Nataraj: This reminds me of Clubhouse, which got an acquisition offer of $4 billion from Twitter. They went and raised a similar amount from A16Z at a similar valuation. When COVID dropped, the hype for audio products dropped, and everyone featurized Clubhouse. At that time, the rational choice, even if you’ve only spent two years on the company, is to sell.

Aviel Ginzburg: I think it is. That’s the point I’m making. Just because Clubhouse got featurized and there was no long-term residual enterprise value does not mean it should be viewed as a failure. You created something of value that there were buyers for. Something does not have to exist on its own in perpetuity to be successful. We sort of lost sight of that over the past decade. It almost became a bad thing to sell your company, like you sold out. Instead, the chip on your shoulder was to build a unicorn. Now we have hundreds of unicorns that are going to go to zero.

Nataraj: One more point and we’ll shift to Foundations. This was also the time where secondaries were huge. Founders who were shrewd enough to make the rational choice of taking more secondaries were also winners.

Aviel Ginzburg: You need to be able to keep founders properly incented, so I expect some semblance of secondaries to continue. But it got nutty.

Nataraj: Moving to Foundations, I was a Techstars mentor for the last two batches before it got shut down in Seattle. I saw this story closely and can relate to how important that space was. It was one of the anchor points for the Seattle startup community. It got shut down, and I felt that Seattle is probably second or third after SF in terms of talent, but we are all somehow not living up to that potential. Talk to me about why you started Foundations, what it is going to be, and what its goal is.

Aviel Ginzburg: The general thesis is that Seattle should be a much better place to be a founder than it is. Coming out of COVID with the rise of large language models, it was embarrassing to watch the phoenix of SF proper with YC leading the charge. The difference is insulting. I went on a listening tour with founders in the area and found this desire to work and build around others, but also a desire to leave Seattle, which was not a good thing for our ecosystem.

I went back in reflection to why Techstars came to Seattle in the first place back in 2010. At that time, it was the rise of cloud and the SaaS business model. There was this new wave of founders excited to build things they couldn’t before. But there were no best practices. The magic came from people working in real-time around each other and sharing knowledge. That rhymes exactly with what we’re experiencing with large language models right now.

Every startup ecosystem needs an anchor point plus rhythms that allow the earliest stage folks, those who are actively building, and those who have been there and done that to get into the same place at the same time. The idea for Foundations was, can we do that and kickstart a flywheel? We need to anchor this around a physical space because that’s something all three of those categories need right now. We created all these different rhythms anchored by events and an entrepreneur-in-residence program to get people together. Our goal is to help people quickly on their way. Success is having a founder who went down and did YC, while others who were thinking about leaving Seattle have instead found a home and a community here. So far, it’s been a great success. Our mission is to serve the founder community in Seattle and make this a much better place to start a company.

Nataraj: So you’re doing Foundations, but have you thought about what other things should exist in Seattle to live up to its potential?

Aviel Ginzburg: There is a very big need for everything from founder matching to the incubation required to get people out from big tech companies. It’s weird about Seattle that we have more venture studios than venture funds. I think that’s because for a lot of people who have been at big companies, it’s a more comfortable path. But we should have another product here. Going to AI tinker events, you see all these people who are not quite founders, but the rise of large language models has been enough of a catalyst for them to say, I want to go out and start my own thing. There’s room for something more structured that could look like an accelerator.

Nataraj: One thing I also think is missing is that we don’t have enough pre-seed funds that write quick, small checks, considering how much talent we have. We have more studio models where it takes longer to get that first check.

Aviel Ginzburg: It’s not that hard to raise that money from the Bay. What we don’t have, and this will take time, is tons of folks in the Bay Area who made their money on startups and write 50k, 100k checks to people who remind them of themselves. The people who made money in Seattle made it by never leaving Microsoft or Amazon. They buy boats and houses on lakes. Their hobby is not investing in startups. We are starting to see those exits and people have that money, but we don’t have one-hundredth of what there is in the Bay Area. We just need to keep investing in our startup community and building things. Five to 10 years from now, there will be a lot more folks who have had those exits and can write those really quick, easy checks where they’re not asking for a business model. They’re just looking at the human and saying, I’ve been where you are, I want to be part of your journey.

Nataraj: What are you consuming right now—books, podcasts, Netflix—that is influencing your thinking?

Aviel Ginzburg: As someone who has multiple jobs and an eight-year-old, you would be surprised at how much I can consume. For podcasts, I listen to All-In, Rogan, and Jordan Peterson, and then I just pick up random other things. I love sci-fi, so I pretty much watch every sci-fi show that is out there. It’s been a year since I’ve sat down with a good book, but I was reminded to reread ‘The Courage to Be Disliked.’ I would highly recommend that book to anyone who’s ambitious.

Nataraj: What do you know about investing that you wish you knew when you first started out?

Aviel Ginzburg: The feedback loops on investing are really long. I am a builder; I started my career as a software engineer. As an investor, if you try to do more than you should, you mess things up because you are not the co-founder. If you are the type of person who really needs the dopamine hit of having an impact, you need to find other places in your life to place that energy, hopefully in ways that are accretive to your work as a VC. And that doesn’t look like just shit-posting on Twitter, because that’s what I see a lot of people do with that energy.

Nataraj: I think that’s a good note to end the conversation. Thanks for coming on the show and sharing your thoughts. I hope Foundations will become an anchor for the Seattle ecosystem.

Aviel Ginzburg’s insights offer a valuable look into the mind of an experienced founder and investor. His focus on founder psychology and his mission-driven approach to rebuilding Seattle’s tech community provide a compelling roadmap for the future of the ecosystem.

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In this conversation, Nataraj sits down with Jacob Bank, the founder and CEO of Relay, a startup building AI agents to revolutionize how we work. With a rich background in AI and productivity from his time at Google and as the founder of Timeful (acquired by Google), Jacob offers a unique perspective on the intersection of automation and artificial intelligence. He shares the winding journey of Relay, from its initial concept as a cross-product collaboration tool to its current form as a powerful AI agent platform. Jacob dives deep into the challenges of building in a rapidly evolving market, the importance of robust integrations, and the product-led growth strategies—particularly his success on LinkedIn—that have propelled Relay to early product-market fit. This discussion is a masterclass in modern company-building, navigating the AI landscape, and understanding the future of automated workflows.

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Nataraj: What is Relay and how did it get started?

Jacob Bank: Relay.app is a platform to build AI agents. The journey has been a bit winding to get here. I started the company in 2021. My background is in academic research in AI and then building productivity tools. When I started the company in 2021, we had two founding premises. The first was that we all use a lot of tools to get our work done. The builders of those individual tools spend a lot of time figuring out how to make experiences within those tools better, but probably not enough time figuring out how those tools interact with the others in your ecosystem. For example, I used to be the product lead for Gmail and we would agonize about every single pixel when you were archiving, replying to, or starting an email. But if you said, ‘Hey, I really need to get data out of Gmail into Notion and then also Salesforce and then send a Slack message,’ we’d say, ‘Sorry, good luck. Use the API.’ When we looked at what knowledge workers are actually doing, a lot of what we do is take stuff from one tool, do some stuff with it, and then stick it in another tool. We thought there was an opportunity where people were underestimating the importance of cross-tool coordination. And second, it sounds so silly to say this now, but it was not obvious in the summer of 2021 that AI was going to be important in doing this. The original name of the company was Collab AI, and we didn’t know exactly what product we wanted to build, just that it was going to help with cross-product workflows and that it was going to use AI somehow to do that.

For the first year and a half of the company, we wandered in the desert, as they say. We built eight or nine different product prototypes that all fit that theme, but none were quite right. We built an automated to-do list, a contextual knowledge base, a stand-up tool, and an employee onboarding tool. Eventually, we landed on a workflow tool. A workflow tool that captured repeated tasks that had an element that can be automated and an element that required human judgment. That’s why we named the company Relay, because we were thinking so many things we do should be a relay race where the computer does some stuff and the user does some stuff. We announced our beta at the end of 2022 and ran it in 2023. By the end of the beta, we realized that maybe there was a category to be created there, but it wasn’t us who was going to create it. It just wasn’t right. When you’re an entrepreneur and you’re just muscling something through that’s fundamentally not right, there’s too much friction.

So in the summer of 2023, we decided we were going to build an automation tool. We would focus on the market that Zapier is the leader in: cross-product horizontal workflow automation for a non-technical audience. But we were going to try to build the modern version of it. What makes it modern is that it’s way easier to use for non-technical people, it has AI better integrated into the workflows, and it has human-in-the-loop capabilities so you can correct your AI when it gets stuff wrong. In 2024, we were an AI-powered automation product, positioning ourselves as the modern alternative to Zapier. We got to initial traction and then early product-market fit. But we realized that by positioning ourselves as an automation product, there were two major limitations. One, you limit the audience of people that think you’re the tool for them. We want to tackle the much bigger opportunity of helping every business get more work done with AI. And second, we didn’t want to be perceived as a duct tape product that only exists to temporarily glue two products together. We want to be a transformative tool. So the evolution we’re making now is transitioning from an AI automation platform for no-code workflow builders into an AI agent building platform for everyone.

Nataraj: When I see a product similar to yours, the problem is we are using so many tools and so much data is spread across different things. How are you prioritizing which tools to bring into the platform?

Jacob Bank: Right now we have about 120 native integrations. The way we think about it is that there are about 12 categories of tools that pretty much every business needs. Every business has an email client, a calendar client, a messaging tool, a CRM, an email marketing tool, an e-signature tool. There are these 12 to 15 categories that are quite ubiquitous. In each category, there are three to 20 players that have material market share. We’ve basically just tried to work our way down that list for our target audience, which skews towards small and medium-sized businesses. If you’re a regular SMB using modern tools, you’ll probably find everything you need with Relay. Zapier has 7,000 integrations; I don’t think you need 7,000. I think that’s a vanity metric. The number we need to get to is probably somewhere between 300 and 500 for the product to really feel complete. I believe integrations are skilled labor. I don’t think this is something you can just outsource. Building a really good Salesforce integration is really hard software engineering. Second, I believe agents will only be as useful as the robustness of their ability to interact with the tools you use. There are two big schools of thought: do everything in the browser or build on top of APIs. I think every serious player will need to do both, but if an API is available, that’s almost certainly a more efficient and robust way for the AI to interact with the product. We have focused entirely on robust API-based integrations.

Nataraj: What has the traction been like? Give us a little bit of insight in terms of the scale of the company right now.

Jacob Bank: We’re now at 440 paying customers. We have about 1,200 weekly active teams. That’s up from essentially zero when we launched at the very end of 2023. I’d call it early product-market fit. My personal definition of product-market fit for a product-led self-serve business is: could I go on vacation for a week and come back with more users, more customers, and more revenue? That is now true of our business. With 440 paying customers, there’s enough there to say that you’re not just a bespoke consulting shop for one or two companies.

Nataraj: What are you doing to drive this adoption further? I think you’ve done very well in terms of product-led content growth, especially on LinkedIn.

Jacob Bank: That’s super recent; we only figured that out in the past month. We’ve been building from the back of the funnel to the front of the funnel. Meaning we started with retention and depth of engagement, then moved to activation, and now have moved to working on top of funnel. In my first company, Timeful, we got 300,000 downloads the first weekend and retained none of them. I was scarred by that experience. So for this company, I would rather have 10 rock-solid, retained customers and then figure out how to bring more in. The strategy that makes sense for our kind of product has to be facilitated word of mouth, facilitated by content, community, and partnerships. I spend a lot of my time on content creation. One type is LinkedIn posts, which are teasers that illuminate a use case for an AI agent. I’ll post something like, ‘I just built a cool AI agent to synthesize insights from my customer calls.’ I’ll make a six-second GIF about it and pair that with long-form YouTube tutorials that show you how to actually build it. On LinkedIn, I now have 15,000 followers, and I’m getting about 150,000 impressions a month. Our YouTube channel will cross 10,000 views for the first time this month. It’s an order of magnitude fewer views, but super high intent. About 25% of our paying customers come from YouTube. Now that we have a robust community, many of them are writing LinkedIn posts or building templates, which helps solve the problem of people figuring out what to use a horizontal product for.

Nataraj: How come there’s no LinkedIn integration when you post so much on LinkedIn?

Jacob Bank: We’re actually in the review process from LinkedIn right now. We’re waiting for them to flip the bit to accept us, but it’s coming very soon.

Nataraj: What integrations are coming in the next couple of months?

Jacob Bank: We have a public roadmap. LinkedIn is at the top. WhatsApp is coming—that’s a really highly requested one. Xero, the accounting provider, is another. We have a few more social media integrations to build, like deepening our YouTube integration and building an Instagram integration. We need to deepen our integrations with website builders like WordPress, Squarespace, or Wix. We just have Webflow at the moment. The drumbeat of integrations will go on forever, but we really want to cluster around the use cases where we’re seeing the most traction: content creation and marketing, research use cases in sales, and general back-office operations.

Nataraj: There’s a lot of overlap with Make.com and Zapier. Do you see them as competition, and how are you differentiating?

Jacob Bank: When people are deciding between Relay and other products, they typically consider two categories. One is the traditional automation players: Zapier, Make.com, N8n. The other is the new AI agent builders: Lindy, Gumloop, Relevance. With respect to Zapier, our main differentiations are a way easier product experience for non-technical users, AI is integrated much more natively, and we have human-in-the-loop support. For the AI agent builders, they typically have good AI primitives because they’re AI-first, but they don’t typically have the depth and robustness of integrations or perfect usability. We all have our strengths and flaws, but we’re all kind of circling around the same opportunity.

Nataraj: This is your second company, and you sold the first one to Google. What didn’t work in that company, and what are you trying to avoid doing in this company?

Jacob Bank: Two big lessons from that company. The first is that we let ourselves be a little seduced by top-of-funnel numbers when we should have focused on having 10 super high-value retained users. The second was we just didn’t understand business. It was like, oh, we’ll just build a mobile app like Instagram and eventually get bought for a billion dollars or monetize it with ads. It turned out there was this other business model of subscription B2B SaaS, which totally existed in 2014, but it wasn’t in our DNA. So for this company, I wanted to make sure it provided rock-solid value, high engagement, and high retention to a small set of customers before we expanded. And second, that from the very beginning, the business model made sense.

Nataraj: You are at the edge where you might be called automation, but if you push, you’ll be called agents. How do you think these will look in two years?

Jacob Bank: I think there are three principles that are going to be really important in agent building. One, agents will need a robust and reliable mechanism to interact with all your tools, likely through APIs in the next two years. Two, agents will need to give you some sort of intermediate representation of what they plan to do before they do it and give you the ability to give feedback. And third, you need a great human-in-the-loop mechanism to correct things and help the agent learn. I think we will primarily use natural language to instruct an agent, then iterate on its plan, and then work with it to get the final output. This pre-compiled version of the flow chart is more understandable to users and will run more reliably and faster in practice.

Nataraj: What’s next in terms of scaling? Are you planning to fundraise?

Jacob Bank: We don’t feel any need to fundraise at the moment. We have plenty of runway, and our revenue is growing quite quickly. It looks like we’d be able to make it to profitability if we had to. That said, we will likely want to raise additional capital because it’s such a big opportunity. But my philosophy on company building has changed. It used to be you raise a round and triple the company size. For the kind of business we’re building—we have nine people right now—I can see us needing 12 or 15, maybe 20, but I don’t see a near-term future where we need 200. Modern company building is going to look very different.

Nataraj: This was an amazing chat. Thanks for coming on the show and sharing all your insights.

Jacob Bank: Thanks so much, it was a blast.

This conversation with Jacob Bank highlights the incredible potential of AI agents to transform business operations. His journey with Relay provides a clear roadmap for building a modern, lean, and highly effective company in the age of AI, focusing on real customer value over vanity metrics.

→ If you enjoyed this conversation with Jacob Bank, listen to the full episode here on Spotify or Apple.
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With a career spanning over three decades, David Blumberg of Blumberg Capital is a veteran of the venture capital world. His journey began in the early days of tech, long before the dot-com bubble, shaping his perspective on what truly drives innovation and success. David was one of the first American VCs to recognize the potential of Israel’s tech ecosystem, contributing to its rise as a global ‘Startup Nation.’ In this conversation, David shares his wealth of experience, from his first investments at T. Rowe Price to founding his own firm. He delves into the key principles that have guided his investments through multiple economic cycles, the unchanging truths of human nature in a tech-driven world, and the importance of backing serial entrepreneurs. He also provides a look into his current investment thesis, focusing on data-intensive companies and the transformative power of AI.

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Nataraj: How did you get into investing in early-stage tech companies? At what point did you decide that you should start investing in tech companies?

David Blumberg: I’ll go all the way back to my high school days because I’m from that generation that came of age after the Watergate scandals of the 1970s. That was an era when a lot of people were depressed about the future of America, about the future of government, and about the ability to solve big problems. I was idealistic. I wanted to solve problems, so I thought I should go into government. I was lucky enough to go to Harvard College, where I started to study international relations in the government department and economics. I loved the courses and was soaking it up like a sponge. I worked in Washington for three summers and after those three summers, I realized that Washington was a place that causes a lot of the problems, it doesn’t solve them. They try, but they have this problem called unintended consequences, which often happens in a non-linear fashion, and a lot of their projections are made in linear models.

At the same time, I had three big influences that moved me toward business. One, I was a middle-class kid, so I needed to work. I started a business at Harvard called Harvard Distribution Services. That company still is going today. It’s part of Harvard Student Agencies. I employed 100 kids doing distribution and courier service. It wasn’t a tech business by any means, but it was so much fun to serve customers, hire my friends, get paid for it, get feedback, and build new ideas for what we could offer them in the future.

Then I had this negative experience in Washington where it was very sexy. I was close to power, at the foot of a senator learning about all these policies, but there was just this level of bureaucratic slowness and lethargy. Nobody cared that the taxpayer was always on the hook, and there was no accountability. I didn’t like that.

Then there was the other interesting thing. I did a thesis on African-Israeli relations between 1973 and 1981. A relatively obscure topic. In 1973, there was an oil embargo after the Yom Kippur War. The Arab countries mostly forced the African countries to break diplomatic ties. But in those same years, trade went up 800% between those same countries that had just broken off diplomatic ties. I thought this was unusual. What I found out by doing a lot of research is that it was the business people, the military people, and the ministers and priests who would bring their flocks to the Holy Land that kept going despite the political rhetoric. They had real interests—economic, military, and religious—and those persevered over the political noise at the UN.

Here’s my conclusion. I decided that I want to help impact the world while I’m alive. I’ve benefited from the history of all the progress of Western civilization, and I want to increase goodness for the world and help everybody thrive. My watchword is human flourishing. To me, the most high-impact way to achieve human flourishing is a combination of capitalism and science. The vehicles, the prophets that drive that forward are entrepreneurs. So I am all about entrepreneurs. I love entrepreneurs. I am an entrepreneur, but mainly I back them now as a venture capitalist. That’s my role in the world, and I feel blessed and grateful that I get to do this every day.

Nataraj: When did you first start investing in a tech company, and if you can remember, what was the first tech company you invested in?

David Blumberg: It was as a public investor. After Harvard, I went to T. Rowe Price, as you mentioned. At T. Rowe Price, I was on the technology team as an assistant securities analyst. My job there was to meet companies that were often about to go public, so they were private and about to do an IPO. I would form an opinion on their financial progress, their future, and their marketing relative to their peers. We would come up with a thesis about which of the IPOs in a new industry we would want to invest in. I started investing that way by making recommendations to the portfolio managers. One of the ones I remember investing in was a company called Scitex. You mentioned that I also invested in Israeli companies for a long time.

That was interesting because T. Rowe Price had never invested in a public Israeli company at that point. Their theory at the time was, ‘Israel’s a very socialist country. It has a very high inflation rate, and there are these periodic wars and terrorism. It’s probably a dangerous place. We shouldn’t invest there.’ My counterargument was that’s already priced into the stocks. Their price-to-earnings ratio was lower than a comparable company in the US or London. They bought my argument, and we started to look at Israeli companies and start to buy them. Scitex was one of the first that helped get into the T. Rowe Price portfolio.

Nataraj: So this is an Israeli company that was going public, or already public, and Israel was considered a socialist country at that point in time.

David Blumberg: At the time in the 1970s and 80s, yes.

Nataraj: I remember India was mostly considered socialist until 1990 when the economy opened up. That makes sense.

David Blumberg: India and Israel share a lot in common. They both had the experience of British colonialism. The British did some good things, and some bad things. One of the bad things was that there was a very powerful group of economists from the London School of Economics that believed in import substitution as an economic model. Israel was told to do that, and India was told to do that. It was completely the wrong idea and really messed a lot of things up. For example, when I first went to Israel, they had a very strong tariff on personal computers. I said to some of the government folks, ‘If you’re trying to build a software industry, it doesn’t make sense to have high tariffs on the tools you need to write software.’

Over a period of time, not because of me, they started to reduce tariffs and regularize taxation of venture capital funds. But in the early 80s, there really wasn’t any venture capital in Israel. There was onerous taxation and not the kind of stock option permissibilities that we take for granted in the US. Silicon Valley was novel. Some lawyers tell me that I was the first person that brought a standard Silicon Valley term sheet from Wilson Sonsini over to use on a deal in Israel in the early 80s.

Nataraj: There’s this amazing book called Startup Nation about Israel. Silicon Valley is obviously the gold standard for tech innovation, and Israel probably comes second or third internationally.

David Blumberg: Certainly in density per capita, it might even be higher in terms of entrepreneurs per capita. But Silicon Valley is the center, no doubt.

Nataraj: There’s an interesting comparison of countries which got independence around the same time as Israel. For example, South Korea and Israel. But Israel was able to develop a tech sector that is as innovative as Silicon Valley. One of the projects that helped them was Yozma, where the government allocated funds and made it lucrative for venture funds to come into Israel. Were you exposed to or part of Yozma at that time?

David Blumberg: Yes, I was very involved. I even helped contribute to some of their ideas, in a very small role. But most of the credit goes to other people. Here’s what I want to push back on: the notion that government leads on these things. I don’t really believe that. I was invited by TIE, The Indus Entrepreneurs, to come to India on a delegation in 1999 to talk to the leaders of India. We met with the finance minister, the military folks, all kinds of leaders of the economy. They said, ‘We want you to tell the story of Israel because Israel had the same British colonial history. They were also a people full of mathematicians and scientists like India, and yet both of those countries lagged until they had a takeoff.’

These Indian folks said, ‘We were village boys in India. We came to a good university, then we went to America and became super successful entrepreneurs because of the American system of the government getting out of the way.’ Whereas in India, Israel, and most developing countries, there’s so much bureaucracy and red tape, which allows bureaucrats to get rich through corruption. It really impairs and depresses entrepreneurial energy. The most important thing for governments to do is just get out of the way and let the entrepreneurs do their thing. We have too much permitting, too much regulation, too much red tape. It’s very hard to do things now in the United States and in most Western democracies. We get sclerotic. What India needed to do was get out of the way of its own people. Israel had to do the same thing. Israel had, since 1948, the most advanced technological workforce in the world per capita, but they were not that successful in tech until the government got out of the way. They had economic reforms and allowed stock options and equity structures. I’ll remind you that in the late 80s, the Israeli economy crashed entirely. The banks failed, the government nationalized all the major banks. It was a complete disaster. It was only with the help of Chicago-style and MIT economists who basically said you have to allow the free market to work its magic. The same thing is what we told India in the 90s, and you’ve seen the power and growth that India has enjoyed too. It’s not that government leads so much as it just needs to get out of the way.

Nataraj: I think I agree with you. The way I understood Yozma was they sort of aligned the incentives and got out of the way.

David Blumberg: Let’s go specifically to Yozma. Most governments are driven by political goals. In Yozma, certain constituents wanted private sector institutional funding. That became the Yozma program. There was another fund to get the retail investor interested. Yozma did a program where if I raised a fund of $100 million, Yozma would put in another $100 million. At the end of the fund’s life, if the fund was a success, we, the investors, could buy out the government at cost—a great deal. The other program, which did not work very well, was an insurance policy attached to publicly traded venture capital funds. It did not work. Again, it’s government trying to be too smart and do too much. The main thing government had to do was get out of the way. I will applaud Yozma because they insisted on one good thing, which was cross-collaboration between experienced international venture capitalists from the US and Europe and Israeli local investors who were doing this for the first time. That was positive because there was a flow of information and a transfer of knowledge.

Nataraj: Another interesting fact about the Israel ecosystem is Warren Buffett’s first investment outside the US was an Israeli company. Intel’s first office outside the US was in Israel.

David Blumberg: Yes, Iscar.

Nataraj: The founders they come up with are usually very exceptional and one of the highest quality of founders that I’ve ever seen in any other ecosystem.

David Blumberg: That did not exist before. Israel did not have MBA programs or a culture of appreciating entrepreneurs. In the old days, under the socialist regimes, the smart kids went into the government or the military. Then a few people became successful entrepreneurs, and they became paragons and role models for the next generation. I will credit this: the Talpiot and the 8200 programs, these special units in the military that recruit the brightest people, give them great training, put them in a small group, give them a budget and a deadline, and say, ‘Here’s your project. You must design this new kind of technology.’ They’re bonded through fire. They put people together who know electronics, physics, radar, and tell them, ‘Build this, and your grandmother’s life depends on it.’ These people are forged together, tempered like fine steel. When they come out of the military, they have been bonded and tested. When you’re finding a co-founder, if you’ve been through that experience of the military together and you’ve had each other’s back, it’s a very powerful way of determining if this person is going to be a good co-founder.

Nataraj: Before starting your own firm, you also worked at Claridge. Talk to me a little bit about that experience and how that shaped your investing later on.

David Blumberg: I’m going to go backwards a little bit because my first mentor was Fred Adler. I met him when I was at T. Rowe Price, and he was the only big, successful American investor who was also willing to invest in Israel. I was interested in that combination. I want to give him great credit because although he was a very difficult man, he was brilliant and he exposed me to venture capital. Then I was fortunate to work with Alan Patricof, another great venture capitalist. And then I worked for Charles Bronfman at Claridge, which is the family office of the Bronfmans in Montreal. I was investing in the US, Canada, and Israel. Family offices have different criteria than a traditional venture capital fund. They had certain personal issues they wanted to steer clear from and other areas they wanted to emphasize. Their background was real estate, which was a little incompatible with my background in venture capital. I had to push and pull and try to explain why we should structure deals in a certain way. For example, they were used to structuring deals with debt. I pretty clearly explained that debt in a venture capital structure in the early stages is not really worth the paper it’s written on, and we need to be equity owners and get rewarded for that equity risk.

Nataraj: So then you went on to start your own firm.

David Blumberg: That’s right. The best deal I did at the Bronfmans, which I’m kind of proud of, was a little pharmaceutical company in Israel. I looked at it as an acquisition. The Bronfmans were not willing to do it on our own. So we bought a company called ABIC and back-to-back flipped it right away into Teva Pharmaceuticals in return for a large stake. Teva at the time was only worth about a billion dollars and later rose to between 40 and 60 billion. It was a rocket ship, selling to 50-plus countries. It’s now the largest generics manufacturer in the world. It was a real testament to that Israeli innovation mindset.

Then, moving on to Blumberg Capital, I started that in the early 90s. At first, I didn’t have a fund, so our team was very small. We called it a virtual venture catalyst. We would work with investors, mostly family offices, to find deals for them. In compensation, we received a retainer, cash on the completion of a deal, and equity as a kicker. We had nine investments, and it was a 9x return on that portfolio. Four IPOs, four M&A exits, and one death. In 2001, Blumberg Capital raised its first venture capital fund. Since then, we’ve raised six funds and now have about 65 companies in the portfolio. Our offices are in Miami, New York, San Francisco, and Tel Aviv. We’re about 27 people on the team. We have two strategies: one is early stage, focusing on pre-seed, seed, and A rounds. Then we have a growth fund that starts late A, early B.

Nataraj: When you started your first fund, to now, it’s more than 20 years. Valuations have changed, things have changed drastically. What didn’t change in this business?

David Blumberg: What did not change? I love that question. I’ve got a great answer. Technology changes, human nature doesn’t. The lesson we learned from that is the context is constantly changing. Valuations are up and down. We know that there are cycles. Nothing lasts forever. The average length of duration on the Fortune 500 list used to be about a century; now I think it’s down to about 15 years. Most of the large companies of today didn’t exist 50 years ago. So the pace of change is accelerating. The lesson of life is keep running. The lesson of Silicon Valley is keep up with the change.

Human nature is going to stay the same. There are jerks, and there are great people. There are incentives that motivate people and bureaucratic constraints that slow people down. My lesson from venture capital is it’s about the network. It’s about the people. If you treat people right, as you know from the karmic principle, it will generally come around to benefit you. If you screw people up, they’re going to remember. If they screw you up, hopefully, you will be smarter the next time and not want to work with them again. So I think that technology changes and you’ve got to keep up with it, but human nature is quite stable. We have been so blessed to work with serial entrepreneurs. We’ve backed them one time and they were successful, twice and they were successful, and sometimes we’re on our third round with these entrepreneurs.

Nataraj: Who are some of those entrepreneurs that you repeatedly work with?

David Blumberg: One fellow is Oren Netzer, the founder of DoubleVerify. We invested $8 million in the seed, A, and B rounds. Ultimately, we were able to take out $578 million in profits when the company went public. He’s started a new company called DataHeroes, and we’ve invested in that. Another example is a man named Dan Sanker. Dan has been the CEO of two of our companies. One, CaseStack, in the logistics area, was sold for $255 million. The acquirer did not want a small skunkworks Dan had set up, so I said to Dan, ‘Let’s just take it and build another company.’ We built another company, and seven years later we sold that company, SupplyPike, for another $216 million. Now Dan is going to do the next company with us, so that will be the third time. Another is Benny Nachman, the founder of Credorax, an Israeli/Maltese merchant acquiring bank. That company ultimately sold for $1.1 billion to Shift4. Now he’s started a new company called Jazzypay, which we’re also invested in. These ties that bind are absolutely wonderful because I know how he thinks, he knows how I think, and we trust each other. We’ve been through hell and back together.

Nataraj: In pre-seed, there is no data. It’s all qualitative. Talk to me a little bit about your decision-making in pre-seed, especially for a new founder.

David Blumberg: At the pre-seed stage, the premium is on the team. The team is much more important because they’re going to pivot no matter what they say. Something’s going to change. A successful investor once told me, ‘No good company pivots less than twice.’ I don’t know if that’s statistically true, but the point is very few people can really predict the future. It’s opaque, it’s unknowable, it’s probably non-linear. So you’ve got to be able to react quickly and effectively. A great team is more likely to do that than a not-so-great team. We look mostly for the teams. I also look for large market potential because it’s better to hit a big target. We also favor industries where there’s not a lot of competition. My friend Peter Thiel talks about this a lot, like little monopolies. Some of the best companies, like DoubleVerify and Nutanix, really didn’t have much competition at all when they started. Or what they were doing was very distinct. We could differentiate and say, ‘They do it this way, we do it differently, here are our advantages.’ So, team first, large market, and minimal competition are three of the key factors for us.

Nataraj: I’ve come to think of two criteria in pre-seed. One is I want an absolutely insanely talented founder, and my definition is they must be writing code way better and faster than any senior team inside Microsoft or Facebook. Do you have your own definition of what talent is for you?

David Blumberg: You remind me of my mother who used to say, ‘Before we had children, I had three theories about raising them. Then I had three children, and I no longer have any theories.’ My analogy would be Nutanix. We were the first investor. We made hundreds of millions of dollars on the exit. They came to us and described exactly what you said. Mohit Aron was one of the most technical of the three. He was considered one of the 50 best programmers in the world. He came from Google, he helped develop the Google File System. He and the other two founders said, ‘We’re going to do what Oracle does for storage. Everybody buys these old, big systems that are hardware and software. Instead, we’re going to emphasize the software and buy commodity hardware.’ We have this wonderful CIO Council. We took the Nutanix trio to them and said, ‘If they build this virtual storage idea, would anybody buy it?’ Three hands went up. Those became their initial customers. But the funny story is, you’re right, they were all really talented. Mohit was probably the most talented coder, but Dheeraj was an executive and Ajeet was the other fellow. They were all brilliant. Each of them started unicorn companies. Ajeet started ThoughtSpot, and Mohit started Cohesity. So they split up, but they were each successful in their own domain. So I think quality is recognizable. You tend to want it to be coding quality, but there are other qualities. I heard somebody recently say that every CEO needs to be the best salesperson for their company. I think that’s true. They may not be the best coder, but often the lead in the company is going to be the more business-oriented person.

Nataraj: You talked about the CIO council you have. Talk to me about that council and how it’s helping you pick winners and losers.

David Blumberg: Our innovation council consists of chief information officers, chief security officers, and chief technology officers. We get them together about four times a year. They really enjoy conversations among themselves on a topic of mutual interest, like AI in production applications given privacy constraints. We’ll have them talk about that topic, and then we present a couple of our companies, either before or just after we’ve invested, and we get feedback for the entrepreneurs from this council about how well the messaging is coming through, product-market fit, pricing, and the go-to-market plan. A lot of feedback comes, and often what comes next are design partners. It really helps because there’s credibility that we’ve built up over decades of bringing them companies like Nutanix, DoubleVerify, and Braze. When these CIOs see something from us, they know that we’ve vetted thousands of companies down to a few that we invest in every year.

Nataraj: I always like to ask investors where they’re investing their own personal capital. Can you talk a little bit about your own strategy?

David Blumberg: Sure. First of all, I’ve been very fortunate to become wealthy through the venture capital business. We’ve had a lot of successes, and the carried interest really rebounds to the benefit of the investor founders. A lot of that capital comes in the form of stock in public companies. I’ve often held those stocks. Sometimes I do what’s called an exchange fund, where I’ll take a chunk of a concentrated stock and trade it over a period of eight years tax-free into the S&P 500. So I diversify without any transaction costs.

I’ve also personally invested in real estate and particularly one non-obvious area. I really enjoy investing, and I’ve made a lot of money in oil and gas and fossil fuels. That’s very uncool, but I am what’s called an energy humanitarian. It’s fine for wealthy people to feel good about themselves by thinking about green energy, but you come from India, so you understand there are hundreds of millions of people that have zero electricity. There are 700 million people on earth with zero electricity today. Four billion people have less than four hours a day of access to electricity. The world needs a lot more power. The only possible way we can get the poorest people on earth to have enough energy is if we utilize more of the God-given resources of natural gas and coal. I’m all in favor of innovation—solar, wind, nuclear, hydro—where applicable. But the vast bulk, 80-plus percent of the world’s energy, is still coming from fossil fuels. So while everybody’s voting against it, I vote for it, and I make lots of money because when people are voting with their emotions instead of the data, they lose and I win.

Nataraj: Who are the investors you admire the most and like to learn from?

David Blumberg: Peter Thiel is a friend, and I admire him greatly for his intellect, his ambition, and his rule-breaking mindset. Joe Lonsdale is in a similar vein, and we’ve invested a lot together. I also think that Marc Andreessen and Ben Horowitz are amazing; they’ve built an incredible franchise relatively quickly. Of course, the classics, the people at Sequoia like Moritz and Leone, are tremendous. And I’m old enough to have worked with some of the great guys from the old generation. Venture capital has changed. When I was starting out, it was very much a hardware business, centered around semiconductors and test equipment. That’s why we call it Silicon Valley. Today, obviously, it’s coders that are at the top of the rank. Now we’re automating the information world, the world of knowledge workers, the world of data. That’s why we at Blumberg Capital look for data-intensive companies that can sell into one vertical or more, using intelligent algorithms to shape, refine, distill, and interpret that data. Every industry on earth can become more productive. My way of describing venture capital is we are the outsourced R&D function for large corporations.

Nataraj: What are you consuming right now—podcasts, books—that is influencing your thinking?

David Blumberg: This always shocks people. I’m a huge reader of the Bible. I think that the Bible is the greatest guide to human nature, to wisdom, and to what really matters in life. I have a specific version I like by Dennis Prager called ‘The Rational Bible.’ It doesn’t require suspension of belief or disbelief in science; it’s totally copacetic with science. But it teaches you why and should, rather than just what and how.

In other domains, I love listening to economics podcasts and edgy technology discussions about what’s going to be next in four, five, or 10 years. Also on demographics and regulatory changes. I like to read the editorial page of the Wall Street Journal. A politician who doesn’t understand economics is not going to be helpful, and an economist who doesn’t understand politics is not going to be successful. One needs to know both. I would say the most important thing is continuous learning. I’m told that an engineer today is outdated in seven years after they graduate from college because things are changing so fast. So nobody’s a genius constantly. You need to continue learning, and the best way is learning from other people.

Nataraj: Who are your mentors who helped you in your career?

David Blumberg: Fred Adler was one of my great mentors. A lady named Abby Joseph Cohen hired me at T. Rowe Price; she went on to become the ‘Queen of Wall Street’ at Goldman Sachs. Alan Patricof has always been a gentleman. Charles Bronfman is a prince of a human being, a great philanthropist. And the people I learned most from are the entrepreneurs we’ve worked with because they’re always confronting really difficult challenges. I love watching the way their minds think about how to overcome a challenge. That’s the beauty of being an entrepreneur and the privilege of being a venture capitalist.

Nataraj: One last question, what do you know about investing now that you wished you knew when starting your first fund?

David Blumberg: This is very easy. The most important thing for young people is to always get your contracts pinned down. Make sure you have a contract and it’s clear, especially if you’re doing consulting. Make sure that everything is written down and bound into a contract because after one starts a project, people’s memories change, incentives start to diverge, and you can get into a big fight. The most important thing is to get everything squared away up front. You can always adjust it later, but if you don’t get it signed, you’re at grave risk of losing what you’ve worked so hard for.

David Blumberg’s insights offer a timeless perspective on venture capital, emphasizing that while technology constantly evolves, the fundamentals of backing great people and solving real problems remain the same. His story is a masterclass in long-term vision, resilience, and the power of building lasting relationships.

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In this episode, we sit down with Court Lorenzini, the visionary co-founder behind the $16 billion e-signature giant, DocuSign. Lorenzini takes us back to the early days, revealing that the path to success was a ‘slow grind’ rather than an overnight explosion. He shares the fascinating inside story of how a presentation at Microsoft’s executive briefing center led to landing them as a pivotal first customer, providing the seal of approval that catalyzed their growth. The conversation also explores the strategic partnership with the National Association of Realtors, which embedded DocuSign into the daily workflow of millions. Beyond DocuSign, Lorenzini opens up about his subsequent entrepreneurial journey, including a spectacular failure and the invaluable lessons learned. He now channels this wealth of experience into his latest venture, Founder Nexus, a community designed to help fellow founders navigate the treacherous startup landscape and increase their odds of success.

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Nataraj: You’ve started several companies; I’ve lost count on your LinkedIn profile. Everyone knows DocuSign, which has a market cap of $16 billion today, but you’ve founded a couple of companies before and some after. Could you share a bit about your career up to now?

Court Lorenzini: Certainly. I started my career as an engineer. My undergraduate degree was in engineering, and I did three postgraduate master’s programs in different forms of engineering. But I always knew I wanted to be an entrepreneur, so for me, that was just a pathway to getting to where I am now. Early in my career, I worked for a semiconductor equipment company, ran a division for them in Europe, and then went to work for Cisco in the early days when it was on a rocket ship. During the years when Cisco was considered the fastest growing company ever, it was a fantastic place to learn leadership.

Nataraj: I’ve had several guests who were at Cisco during that rocket ship phase. It fostered a lot of successful people.

Court Lorenzini: It was a great place to learn. I moved to the Northwest in 1996 and started my first company at the dawn of the internet era, before e-commerce. I built one of the very first e-commerce engines and ended up selling that company. I tried my hand as a venture capitalist for a bit but realized I enjoyed building companies more than investing in them at that time. DocuSign was my second company, which I co-founded with a friend who had worked for me in my first company. I ran that as the founding CEO until 2008 and then left because my passion is the first phase of a company. I love what I call the ‘napkin to product-market fit’ phase, where every decision is life or death. That’s my favorite part of growing a business. In my career, I’ve structured it so that by the time I get to about year five and there’s a product-market fit signal, I tactically exit and go start another one from scratch.

Nataraj: When you were starting DocuSign, what was the original thought? Did it evolve?

Court Lorenzini: My co-founder, Tom Gonser, had the idea. He came to me after leaving my first company. His own company was in the process of selling assets from a prior venture it had acquired called DocuTouch. He called me and said we should build a company around the IP his company was trying to get rid of. In that IP package were two things of value: the trademarked name DocuSign and an issued patent for signing documents via the internet. I thought that was interesting. We extracted that, bought the IP from his company, and that’s the basis around which we founded DocuSign. He left his company, and we built it together. It was amazing.

Nataraj: Was it obvious from day one that this was going to be big, or was it a slow grind to product-market fit?

Court Lorenzini: It was a really slow grind. I remember telling the very first venture investor that it was going to be a winner-take-most proposition. They kind of scratched their head, and I said that someday, one market leader would have about 70% of the worldwide market share. There would probably be a second player with about 20% and a bunch of copycats in the last 10%. If you roll the camera forward to today, DocuSign owns about 76% of the worldwide market, Adobe has about 12%, and everybody else is in that last 10-12%. It came true exactly as I predicted over 20 years ago. It was not obvious; it was a grind. It took a lot of creativity to figure out how to get product-market fit, and it took years. We founded it in ’03 and didn’t go public until 2018, so it was 15 years to a public offering.

Nataraj: Who were the first or most impactful customers?

Court Lorenzini: The most impactful relationships were the ones that took it from ‘kind of cool’ to ‘going to be amazing.’ The first one was Microsoft. This was an interesting story. We were a very early adopter of .NET technology. It turned out that at Microsoft’s executive briefing center, the .NET team was presenting to executives. Without telling us, they used DocuSign as an example of a company using .NET in a cutting-edge, valuable way. In the audience was the chief legal counsel for Microsoft. From that meeting, I got an inbound phone call from him saying, ‘I was just at the EBC. I heard this thing is really cool. We should be using that.’ That’s how we landed Microsoft. It wasn’t me calling them; it was them calling me. Because it came from the legal team, it was blessed inside the organization from day one. At that moment, Microsoft was the biggest company in the world, so that helped a lot of other companies get comfortable. It was the seal of approval I needed. The next one by far was the National Association of Realtors (NAR). The NAR had software used by three million realtors nationwide to create home purchase and sale agreements. They liked what we had and agreed to embed our signing tool inside their software as a white-label deal. This meant every realtor in the country immediately had an opportunity to send documents to home buyers via DocuSign. That was a huge deal because it gave us volume and exposure to an incredible group of end-users who had day jobs where signing things electronically would be fascinating. We got a tremendous amount of lift from that deal.

Nataraj: It seems like a sign you’re solving a real problem when customers come to you inbound. You predicted one player would dominate 70% of the market. It’s a seemingly simple software, so why does DocuSign still hold that position against competitors in the broader document management space like Adobe, Google Docs, and Box?

Court Lorenzini: There are two core reasons. First, humans prefer consistency. If we were constantly forced to use a whole array of different signing methods, it would get confusing, and it would be hard to find your stored documents. Human characteristics were going to drive standardization on one player. It’s also a trust factor. The other main reason it remains dominant is that early on, we recognized that a key element to resolve wasn’t the signature itself but the flow of data between the universe of document creation tools upstream and the universe of document execution tools downstream. Upstream, you have Word, Adobe Acrobat, and special-purpose platforms creating documents with relevant data. Downstream, you have big software companies like Dynamics, SAP, and Salesforce that need that same data to produce, ship, support, and bill for a product. We invested very early in a set of robust APIs that could take data from upstream systems and seamlessly move it to any downstream system. We built years of expertise in data translation via APIs, creating a large constellation of tools that really cannot be replaced by a third party. Most enterprises won’t take the risk of replacing us because a competitor would have to have all the same tools working perfectly on day one. That moat has been a huge differentiated advantage for us.

Nataraj: When you left DocuSign, did you sell your equity or keep it?

Court Lorenzini: I kept it all and moved on to start several more companies. By the time the company went public years later, I still had all my equity.

Nataraj: I spoke with Martin from Insights VC, an early investor in DocuSign, who said he never sold his shares and mentioned a ridiculous multiple. What did your multiple look like?

Court Lorenzini: The shares were founder shares, so they were basically fractions of a penny, and they got to over $300 a share. It was a very healthy return, let’s just say.

Nataraj: After five years, DocuSign was successful, yet you went on to found other companies. Are you an ambitious person?

Court Lorenzini: I think people would describe me that way. I’m certainly an optimist, and I love the thrill of getting something off the ground. When you’re successful and you do it repeatedly, it means you’re in it because you love the game.

Nataraj: What was your career like after DocuSign?

Court Lorenzini: The third one was a renewable energy company. I was trying a business model that didn’t require much venture capital, just a few hundred thousand dollars in angel money. It was intended to be a cash flow business, which it turned out to be, returning cash to my investors. I wouldn’t say it was a giant hit, but it returned capital. Then I started my fourth company, a consumer data acquisition company called Metabright. That one was my most spectacular failure. It was a rocket ship with 50% month-over-month growth on a multi-million dollar run rate. Between that and absolute catastrophic failure took less than three months.

Nataraj: Wow, why did it fail so drastically?

Court Lorenzini: The technology we were building was data extraction from checkout register receipts. We built an OCR-based system that could read and translate that cryptic writing into real product data. We were licensing it to other application providers. Our biggest customer was delivering 90% of our revenue and growing like gangbusters. One day, the founder of their company was at an event and sat next to a young man who had just finished his master’s program in Croatia. He and his buddies had written a program to read receipts using a cell phone and was willing to give his code to my customer for free. Within weeks, my customer tested it and called me up to say, ‘You’re out. He’s in. Bye.’ When your 90% revenue customer walks away with no warning, you don’t survive that. I went to Croatia to try and buy the technology, but couldn’t get a deal done. I called my investors and employees and said we had to shut it down. It was very gut-wrenching.

Nataraj: How do you evaluate opportunities now and decide if they’re worth your time?

Court Lorenzini: I have a methodology I promote to early-stage founders. First, validate your product by testing if someone will pay for it before you even build a prototype. Get them to put down a down payment or something to test the concept. Second, and this is the one most people miss, actively try to kill it. I go back and find founders of companies that preceded me in the same solution space. I ask them what happened to their company and why it failed. Through that exchange, I learn all the fatal, foundational flaws I need to be aware of. It’s an incredibly eye-opening process. If you can diligently uncover and resolve all those fatal flaws with your approach, you’re probably on the right path. I tend to be pretty rigorous about both of those things before I jump into something new.

Nataraj: Let’s talk about Founder Nexus. You’re not raising outside money for this. What is it, and why are you doing it?

Court Lorenzini: Founder Nexus is my thank you note to the venture capital industry. I’m not trying to get myself or anyone else rich, but I’m using it as a vehicle to help founders on what is an otherwise difficult, lonely journey that’s statistically destined to fail. The odds of failure for a venture-scale founder are over 90%. I see these founders as a valuable global resource that isn’t being optimized. So I’ve set out to figure out how to raise the odds of success for them. Founder Nexus is a way for founders with experience to get together regularly and be motivated to help each other by sharing experiences, not advice. I gather these venture-scale founders, put them in subgroups, and create opportunities for them to actively share their experiences to level up their game. Success in building a venture is a series of variables multiplied together. If a single variable is zero, the whole equation fails. If you can get every decision to be made at 50% or above its potential value just by gathering information, that will inevitably raise the odds of success for all participants.

Nataraj: Community is all about curation. How do you ensure the right people are in the room?

Court Lorenzini: Curation is key. I filter out anyone who has never built a company before. They have to be well on their way, having already raised their first venture round or outside capital. I’m looking for valuable lived experiences. I also filter out investors, advisors, and service providers. This way, everyone knows the room is pure; everyone is another venture-scale founder who’s been there and done that. This creates an immediate sense of trust and vulnerability. We also build forums, but unlike others where you extract all the business wisdom in 18-24 months, our forums only last for 40 minutes each. Then, software reassigns everyone to new groups with new topics. You get three of these per event, so you hear from 12 to 20 new voices of lived experience each time. You’re also grossly expanding your network of highly qualified people for recruiting co-founders or C-suite talent.

Nataraj: How’s the traction? Is it limited to Seattle?

Court Lorenzini: We’ve held three events and have about 150 people signed up. We just opened it up to full membership. Our next event will be our first simulcast, with both a live and online component to allow non-Seattle participants. My long-term objective is to have chapters all over the world, stitched together so founders in one community can help founders in another. This way, venture-backed companies can live and excel anywhere.

Nataraj: You’re an LP in a lot of funds. How do you decide which ones to invest in?

Court Lorenzini: I’m very active in the Seattle ecosystem to give back to the community that helped me, but I’m not restricted to it. My wife and I have probably invested in almost 20 venture funds around the world. It’s always hard to decide who will be a good picker. I tend to like very early-stage funds; that’s where my passion is. Sometimes it’s a gut feeling, or seeing if a fund’s thesis gives them a leg up. A number of funds we’ve invested in are run by non-traditional VCs, like women or people of color in different regions. We think those investors know their market better and will probably get outsized returns.

Nataraj: Has any area surprised you in terms of performance?

Court Lorenzini: Geographically, no. But I will tell you that several of the women-run funds are grossly outperforming their peers. Female VCs are historically few and far between, but the ones we’ve invested in are dramatically outperforming the rest of the crew. It’s amazing.

Nataraj: What’s your view on the current valuation landscape, especially with the AI craze?

Court Lorenzini: I invest in early-stage funds, so by definition, these are not high-valuation entry points. If they’re betting on AI, they’re not writing big checks at high valuations; they’re coming in at the concept stage with bigger upside potential. My investing strategy is like a dumbbell. I have a ton of diversified dollars in the low end, and a few very concentrated private equity positions on the high end, right on the cusp of pre-IPO.

Nataraj: Why did you pursue three master’s degrees?

Court Lorenzini: Each of those master’s was opening a door to a new opportunity. I was working for a semiconductor equipment company that had a program to pay for advanced education. For me, each master’s program was a way to get a new promotion. I got three very significant promotions in a short time. Within three years of my undergraduate degree, I was going to Europe to start a new venture for that company. There’s no way I would have gotten that opportunity at 25 if I hadn’t done all that work. I did computer science at Berkeley, manufacturing systems engineering at Stanford, and optical engineering at the University of Wisconsin-Madison. Each one was a gateway to a new career step.

Nataraj: What are you consuming right now that’s influencing your thinking?

Court Lorenzini: I love to read. I recently consumed ‘The Three-Body Problem’ series, which was mind-opening. Also, ‘The Fourth Turning Is Here,’ which contextualizes where we are in history. I’m really fond of a book by John Levy called ‘You’re Invited,’ which was helpful for Founder Nexus. And another called ‘The Power of Pull.’ On a podcast basis, I’m a huge fan of Acquired and ACQ2.

Nataraj: Who are the mentors that helped in your career?

Court Lorenzini: Shout out to my dad first and foremost. My father was one of the eight people that founded Silicon Valley; he invented the process for growing silicon commercially and was on the team that discovered solar power. He started seminal companies. Also, the founder of KLA, Ken Levy; the original CEO of Cisco, John Morgridge; and his successor, John Chambers. They were huge influences.

Nataraj: What do you know now about being a founder that you wish you knew when you were starting out?

Court Lorenzini: I wish I had sought more experiential advice. I got a lot of guidance from people who gave me advice but not experience, and that usually set me in the wrong direction. When I talked to people who had lived the experience I was struggling with, I got better counsel. I also had to learn how to delegate effectively and, crucially, how to follow up to ensure things got done. And finally, learning how to proactively hold people accountable as a leader took a while to understand.

Court Lorenzini’s journey offers a masterclass in resilience, strategic thinking, and the importance of community. His experiences, from the heights of DocuSign’s success to the lessons of failure, provide invaluable wisdom for any entrepreneur.

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