EP9: Curating a Quality Community That Grows Itself with Underscore VC

Creating a community with a focus on quality over quantity isn’t something all communities do. However, that's exactly what Underscore VC focuses on. We talked with Jenni Goodman, Underscore VC Community Manager, on the show to hear how they have built a carefully curated community for their VC firm that serves the Boston area.

The community, called the Underscore Core, is made up of investors, advisors, and founders that Underscore connects together to support one another. Jenni makes a great point in the episode, stating that by focusing on getting quality over quantity members are more likely to refer others to the community - which is exactly what they do.

Underscore has tried many different types of events and have found that the best format for them has been roundtable dinners. They found that this lead to the best conversations with around 8-12 attendees at the event.

They also have an extremely strong incentive for a handful of their most trusted Core Members that have become their “Core Partners”- Giving them a portion of the firms carry, and placing them at the top of their cap table, meaning they get paid out before Limited Partners. This means that founders in the Underscore portfolio enjoy the right expertise, from the right people, and all on Underscore's dime. This is a great way for them to keep people engaged, finding new community members and help companies in their portfolio.

The most powerful thing about their community is that, while they have a small staff, roughly 70%-80% of their portfolio members have come from their community. Even with a large firm the partners and employees only know so many people that could be potential investments. In turn, creating a community is the best way to reach new companies for deal flow!

Transcript


[INTRODUCTION]

[0:00:03.8] DA: Welcome to the C2C Podcast. I am your host, Derek Andersen. After holding my first event in 2010, I went on to create Startup Grind, a 400-chapter community based in over a 100 countries. Along the way, I discovered the greatest marketing tool of all time; your customers. Yet, I couldn’t find anyone sharing how to build a community where people could experience your brain in person, or at scale.

On this show, we talk with the brightest minds and companies on the planet about how to build customer to customer marketing strategies and create in-person experiences for your brand and customers before your competitor does.

[INTRO]

[0:00:43.8] JF: John Fry from the big team here and I am so excited to announce our next guest, Jenni Goodman. Now Jenni is a community manager over at Underscore VC and this episode is special because we talk about how to create a highly curated and a high quality community. It doesn’t have to be super large to have an impact.

In fact, she mentioned in the episode that because of the community they have been able to supply the VC firm with deal flow from people who are members of the community. We also talked about the different events they did, what types are working, what aren’t and so, so much more.

Without further ado, please enjoy the show.

[INTERVIEW]

[0:01:26.8] JG: So Underscore VC is a venture capital firm. We are located in Boston, Massachusetts and we primarily concentrate in cloud and SaaS companies but we were really founder first. We really believe that the founders make the company and really want to concentrate in bringing the best people into our fund. Whether that is someone that’s working at a company in blockchain or crypto, AI, ML, serverless, e-commerce, et cetera.

But what is really exciting when I think one of the reasons you have me on here, the reason you have me on here is we are all about community. When we talk about Underscore VC, we talk about community. We were actually created to surround ourselves with the Boston ecosystem and with what we call our core community.

[0:02:14.9] DA: And so tell me what that means exactly, how do you surround yourself, what do you do to support Boston?

[0:02:21.7] JG: Sure, so we truly believe that it takes a community to build a company and so the Underscore core community, that is what we call our community, is really created out of Boston’s best thought leaders, experts and entrepreneurs but they’re aligned by different domains, stages and functions. So as companies grow from you know, you support C to series A and when they grow from those and beyond, it really needs different support group in every step of the way.

So for example, imagine you are building a blockchain company, when you are raise your first say $1 million, you need a different group to surround you and support you. You might need a different sales leader. When you have your first few customers and when you are growing into having 30 customers.

So we support you with this community through the different steps and different series. So it is really, we are really looking to make sure that you are surrounded by the best people because no matter how many investors we had in our team, it can never really be enough to fulfill all the different things that you need as a company.

[0:03:30.4] DA: You know we talk to a lot of communities about going global or going national or going in from a location standpoint just doing so much more and I think it is really interesting and really unique that Underscore has stayed true of this idea of like, “Look, we know what we are great at and we know we want to be great.”

And that is really helping entrepreneurs and founders in Boston. Has it been hard too at times to not – I know you do fun things outside of Boston but has it been hard to keep that restrain on it or has that been liberating or is has been somewhere between? How does it feel to say, “You know what? We are just going to be great in Boston and to service people here.”

[0:04:20.5] JG: Yeah. So again it comes back to community and our network. Our network is really based in Boston. The best schools are in Boston, the best hospitals. Truly we think some of the best talent is here and the best companies are coming out of here. So we have this, our core community that is based out of Boston and they serve as advisors and mentors of the companies that we invest in. So it really makes sense to have them located in the same location and these mentors and advisors are able to be the most helpful because the network is here.

So it is actually we decided for the second fund is really when we decided to call ourselves Boston biased and as of now, I think it is 80% of our capital has been invested in companies that are based out of Boston and you know the idea of a goal would be companies actually moving to Boston to be able to work with us.

[0:05:15.1] DA: So community is really important to your model. So let us dig into the details. First talk to us a little bit about what overall metrics and measurements do does the firm look at from a standpoint of this is where we wanted to invest and grow community. What types of just quantitative numbers or even programs do you look at that move the needle?

[0:05:38.1] JG: Sure, the things that really move the needle are more quality I would say than quantity. A players bring A players, right? So who are the best executives, who are the biggest thought leaders in the areas that we concentrate in that we could get to bring in our community. That cannot only help the startups that are in our portfolio but could actually also be future talent for our portfolio companies. When companies come to us, you know obviously looking for capital but besides capital, the top things that companies are looking for, for growing companies is that talent.

So by bringing in community together, how could the potential talent help grow the company and potentially even be future hires. So for us, we really look towards I would say engagement as in, “Okay, who is so excited to be with us that they also bring additional people into our community?”

So that is a big metric that we look for is being recommended by other executives that want to then join the Underscore core and are excited to work with our company and then also, just finding talent well going back to that, you know who is being told, “Oh you need to go to Underscore because they have the top companies.”

And you want to apply to work there and then also just recommending investment opportunities to us as well.

[0:07:02.8] DA: I know you host dozens of events, round tables, workshops, tell us what you’ve learned from that, what’s worked, what hasn’t worked and what are you investing in 2019?

[0:07:14.1] JG: Yeah, so it is a very good question. I like to experiment but it is always good to find who you know in the network. So in previous roles where I’ve had it has been more about quantity, right? You want to have the most people there. The thing I have been finding really interesting and also sometimes very difficult is how do you have like a core group of very high quality people, say eight to 12 people around the table that could actually have a meaning discussion together.

They walk away being like, “Wow, I learned something that I can bring back to my company and I want to be with these people again.” And that is not always when you’re with a group of 50 people. It is when you’re with that really I would say almost like peer group. So we found that having these peer to peer dinners have been incredibly valuable. What’s difficult about that is really trying to find people that are potentially on the same level, right?

So if you are an executive, sometimes you want to be with people that are a few years below you to serve as like mentors for them but sometimes, you really want to be with people that are potentially experiencing the same problems as you. So how do you make sure there were very much curating these events. So it is people that are in the same room that really want to be having meaningful discussion. So example, we’ll have a dinner for sales leaders.

Because they are able to have these discussions that are potentially going through the same things and having meaty conversations but then they also want to not only not network with potentially sales leaders but who else do they work with on a day to day basis, right? So they’re also probably wanting to talk to marketing leaders and other companies. So what we have done is having events that are in tangent with each other.

Where we will have different dinner discussions for these key leaders and their functions but then coming together for networking opportunities as well. So we have events throughout the year for that and then we have in October of the year when all of our community comes together is what we call our core summit and last year, we have over 500 members of our core community come to that and it is a half day of networking and talks and really being able to come together and discuss software, the future, et cetera.

[0:09:33.5] DA: I wonder as you are going really deep with very high quality individuals, do you have metrics of keeping them happy or keeping them engaged or tracking them? How do you manage that process with a smaller, generally speaking a smaller group of people but wanting to go really, really deep with those people, what do you do?

How do you logistically just deal with that and then how do you think about taking them on your customer journey of community success?

[0:10:10.4] JG: Sure, so just maybe when you asked or maybe not but I am going to say it anyway, so we had two main programs that really have emerged out of the bigger Underscore core and they’re called Core Partners and Core Syndicates. So we have broken them down. So we have the bigger core, which is you have hundreds of people in our core. So people that are helping us invest, helping our source, helping us with our companies, us giving back to them.

But we also have these core partners who we actually align to our portfolio companies based off of these entrepreneurs needs. So entrepreneurs actually select these core members or even folks outside of the core as mentors to our journey and in return, these core partners actually receive shares from us and they actually sit at the top of the cap table on Underscore’s dime. So when we say we are fully community, we actually give part of our shares back to our community.

In order for them to help our companies and then, we also have what we call our core syndicate of just regular people as well that are from our core that actually get to invest alongside us. So they will invest their own money but it will be in the same terms as Underscore. So they actually go on top of our cap table. So we have more dedicated programs for certain individuals as well that even want to dive even deeper.

[0:11:37.0] DA: Awesome. You’ve been doing community for a long time and how do you see the way that these things are progressing or the way that you are experienced with these influencers in Boston essentially and entrepreneurs in Boston, how has it changed from as it has been happening over the last years going into the future, how do you see things changing?

Does it happen more? Does it happen less? Does it happen in the same way, a different way? Where are you seeing the overall trends going for the community work that you are doing?

[0:12:07.8] JG: Yeah, I think what’s really exciting is like when you have events, there is only so many events you could do a year, right? There is only a certain amount of network you could do whether it is based on budget or time, availability whatever but the thing that I think is really exciting and just thinking about community as a 365 like living and breathing thing. So yes, there’s events that happen in person but then also you gathering communities online.

So whether it would be having this Slack communities or Google groups or LinkedIn, how do you create this type of community that is able to function all the time and kind of without you as well. So how do you create self-sustaining groups, which I think is incredibly exciting and that is one of the things that I am excited to be working on through Underscore as well and our community. Making sure that these groups are doing things that they want to be doing.

They are actually running themselves based upon their own agenda. Based upon their timeframe, thinking of themselves, “Who wants to attend these things?” And we are not really running it for them but we get to be the ones that are getting to still see what is happening but they are deciding what they want out of these groups.

[0:13:20.9] DA: Yeah, that seems like Underscore, which is not dissimilar at least how it appears publicly on the website to many other venture capital firms there is just not a lot of people inside of the firm. There is some investors and there are some operators but there is not like this huge staff of 50 people or something. So it seems like that’s probably the only way that you are going to be able to continue to grow or to keep up.

Is if you sort of galvanize the local people in the community already, empower them per se and get them working with you to self-organize or take care of some of these things on their own because you can only do so much. That’s sort of the reading, is that right?

[0:14:04.7] JG: Exactly. Even if we did have 50 people, right? There’s only so many people you know you need those other extensions to find companies and find the best founders in Boston for us. Any entrepreneur or any individual really can’t do it all and so you need, you really need that community in order to thrive and I think really, the next wave of investing is in this community model.

[0:14:30.7] DA: Do you have like an ideal customer or target for somebody that you look for either to get involved deeper or just to attend the events, do you have customer profiles on people or do you not think of that way, do you think about it in different way?

[0:14:47.0] JG: Yeah, I think that’s a really interesting question. We think of it, we kind of remind our core community based upon domain, stage and function. We want, you know, to work with the best people in their domain. You know, the best people that are working in crypto that are working in serverless, e-commerce commerce, et cetera.

Then it’s like, who is the most knowledgeable in you know, their function, who is the most knowledgeable on marketing, sales, customer success, et cetera and then you know, also then that goes for stage. Series A, series B and those people are kind of all mixed and all over and trying to find that breakdown from there because it’s very important that it’s all very different because you need different people during every stage of your journey as a founder.

[0:15:40.0] DA: One question that I have for you as we start to wrap up is, I know you said at the beginning that community was really at the core of Underscore VC’s model and I wonder if Underscore didn’t have any community participation, didn’t have any community programs and didn’t engage in this way, what would Underscore look like or be without community?

[0:16:04.2] JG: I wouldn’t be there and that would just be a shame, why would they exist. I think it’s honestly like nearly 75 to 80% of our portfolio has not been found by investors in Underscore. It’s been found by our community. We really rely heavily on our community to bring us the best companies.

Not only that but to help the companies grow as well. We’ve been able to give our portfolio companies, advisors and experts from our core community, people that were really looking for that as an investor and that’s our full time job. We have to give other members of the community and find other people that could help them, have more expertise on subject matters that we may not.

Finding those subject matter experts and those thought leaders have truly helped grow these companies and help these founders in ways that we couldn’t. We’ve been told by our portfolio companies, some of them that knowing our community and knowing the quality of the community is one of the reasons why they chose us as their investors.

[END OF INTERVIEW]

[0:17:17.0] DA: Thank you so much for listening. If you like the show, please leave a review wherever you listen to this. If you like to see more, about how to create your own event community, go to bevylabs.com/pod.

[END]

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