In episode 69 of Pit Stops to Podium, we sit down with Jyri Engeström, Co-founder of Yes VC and experienced entrepreneur and investor, to discuss the role of entrepreneurship as a "soda straw" between different communities. Jyri shares his insights on how startups can bridge gaps between diverse communities and create positive social impact through innovation.
With a focus on investing in startups that are building a better future, Jyri draws on his years of experience in the tech industry to provide valuable perspectives and actionable advice for aspiring entrepreneurs. We also explore the differences between angel investors and venture capitalists, and the importance of aligning expectations and being clear about goals and values when working with investors.
If you’re ready to learn from one of the best, then buckle up and hold on!
A person that is part of several very different social networks will often serve as a "soda straw", linking divergent groups together. Often, this is an immigrant founder who can connect people in their home country to people in Silicon Valley. These "soda straws" are valuable because they can link groups together which otherwise would have a very slim chance of connecting.
"It's someone who can function as a broker of information between disconnected social networks, and they often times end up being the most valuable people you can know."
The thought among VC's has traditionally been that you should only focus on one company at a time, but that idea is flawed as it's a waste to have top founders be too narrowly focused. The best founders always do multiple things at once (e.g. Elon Musk with Twitter, Tesla, SpaceX). It allows founders to inject themselves in multiple information flows at once, find the opportunity before their competitors, and be the "first movers" on a new concept.
Bottom line: The era of serial entrepreneurs is giving way to an era of parallel entrepreneurs.
"It's an era where I would encourage creative people to expand instead of contracting"
The first job is to communicate the vision. If you do that well, then your second task, raise the financing, is easy. Third, hire the best people. If a CEO does their job well, then the people they hire will be able to execute on all the other tasks of the company. This then frees them up to be the CEO of another company as well.
"If you're great at delegating, then you can actually do multiple companies at once."
Twitter: https://twitter.com/jyri
Email: partners@yes.vc
Brendan Tolleson: Hey everyone. Welcome to Pit Stops To Podium, the RevPartners Podcast where we talk to execs who competed and won in taking companies from high growth to high scale. My name is Brendan Tolleson. I serve as a co-founder and CEO of RevPartners, and I'm delighted to have with me today, Jyri Engestrom for this episode of Pit Stops to Podium. Welcome, Jyri.
Jyri Engestrom: Thanks. Great to be here.
Brendan Tolleson: Well, Jyri, we're excited to have you. and so for those in our audience that may not be familiar with who you are, Jyri currently serves as a co-founder at Yes VC and I think this would be a great opportunity for you to share a little bit about who Yes VC is and ultimately how you came to build this organization.
Jyri Engestrom: Yeah. We're a Seed Stage Venture Fund based in San Francisco. It's two founders, myself and my partner, Caterina Fake, co-founder, flicker Hunch. served on Kickstarter, Etsy's Chairman. Accomplished female entrepreneur from the Valley that a lot of people probably recognized. Myself, I also have a founder background. I started a company called Jaiku that was acquired by Google in 2007. It's kinda how I made my first money. worked at Google and left Google. Started another company called Ditto, which was a mobile social recommendations app that was sold to Groupon in 2012. And so, out of those exits, I started investing as an angel, for a few years and made some really great bets, including investing in unity early on that went on to be, at one point valued at about 40 billion and returned a lot of capital for me. So, I started shifting from being a founder to being an investor. and ended up lending a job at True Ventures, which is one of the kind of original foundational early stage seed funds here in Silicon Valley. They actually backed my second company and John Callahan, co-founder of True Ventures, was on my board. And so when I started looking at vc, I asked John for advice on which firm I should join, and he's like, oh, why don't you just come work with us? And so, that's kind of how I learned about fund management, which I realized was actually not the same as investing as an angel. Cause now you're investing other people's money, not your own money, and I worked there for about four years. As a, basically as a venture partner, initially I thought, oh, I'm not gonna be a vc. I'll just learn how VCs think, and then that'll enable me to go back and start another company and be a better founder. But as tends to happen, you know, it kind of sucked me in. And I, I, you know, I invested in things like, company called Isight that's now, Doing super well. It's a satellite company that's a true ventures company that I was on the port of for a while, and a bunch of other companies. And then at one point I was like, well, okay, I think I'm ready to do this as a job. Like for real, but entrepreneurs gotta entrepreneur and so I'm like, do I wanna join a partnership that has been founded by other people where I'm like, maybe be White guy, number seven. and I'm like, that could be fun, but what if I just start a new fund on my own and started looking around for somebody to do that with, since I didn't wanna do it just by myself and realized, oh, you know, I had already at that point been investing as an angel together with Catarina for a long time, and she was kind of awesome and really complimentary to me. And it just felt right. Look more like the future than the past, I would say in the sense that, oh, like let's do this kind of, let's co-found with a female founder, who's got a better track record than I do, frankly. this will, you know, help us kind of access the sort of deals that I cannot access that she can access. And so we started Yes VC thinking, you know, we need a name that's short, punchy people remember. That's also a little bit divisive in the sense that a lot of people are like, well, Don't VC's say no all the time. So yeah, we say no, but also importantly, every time I get up in the morning, like just today, I've been talking to a founder. We ended up turning them down. But how do you turn a no, that's an authentic no into something that actually moves that founder forward because really that I don't think that they should be doing that company. so it's about also making sure that whenever you reject people, you, you actually say something that you think is true such. Have you considered this other direction? What about doing something that will grow the company faster? Have you thought of this? And so I think a lot of that name is for us about also making sure that we're at the service of the founders that we reject and actually try to help them come up with something better that we could maybe invest in. Anyway, that's Yes VC and that's what we do. We've been doing this fund. We have, three funds currently, small growth fund and couple of early stage funds. We're on fund two of our, you know, started in 2018. and yeah, funds are doing pretty well. we do a lot of stuff around, ai. Right now we've done a bunch of stuff around climate investing and then more classic sort of consumer products, SaaS, you know, stuff like that. It's generalist vc, so it's really us just, figuring out what excites us and then going after the best founders.
Brendan Tolleson: Yeah I love the, the approach that you take when you talk about the Yes VC and ultimately providing you're, you're supporting entrepreneurs.
Jyri Engestrom: Yeah. You know, like it's, it's, I remember when I was at True, we would look at like, okay, where do we, like, where do our best deals come from? And for a lot of VCs, that's actually the founders that they back, right? It's like you want the founders that you've invested in to when they see something great, another founder to refer. New person to kinda like your family, you know, your, your portfolio. which is true, however, VCs reject 10 times, maybe a hundred times more founders than they actually back. So at one point I started thinking like, what if we. You know, we're able to get all those people to also think we're awesome, even though we didn't back them. And that's sort of what led into that thinking around like, well, gosh, you know, sometimes the most useful thing you can hear is somebody who really, maybe gives you some, helpful feedback and says, why don't you change your plan a little bit? And so the goal here is, If we're doing our jobs well then not just the founders, we back, but also the founders we end up not backing, will think we're awesome enough to respect us or kind of, you know, be able to feed us new deals when they, when they find someone that they think is great.
Brendan Tolleson: Yeah like it. Yeah. You're taking a long, long-term approach, whether it's a yes today or maybe yes tomorrow. Mm-hmm. you're, you're focusing on the relationship, which I think builds trust ultimately with that, you know, that entrepreneur. before we get into kinda the meat of, of our conversation, we do have a tradition here, at Pit Stops to Podium, and that's to get to know our guests outside of work. So ultimately we're human beings, not human doers. So, what are those passions, hobbies, interests that you have when you're not, making those investments?
Jyri Engestrom: Yeah, that's a, wow, that's a, that's such a great way to start. You know, my training was, as a sociologist, my parents are academics and my mom is a sociologist and my dad is a social scientist. And so when I was really young, I got interested in social networks. And fortuitously, it was around the time that tech enabled, you know, there were the fir very first early social networks were just getting built out things like, you know, nobody remembers these anymore but Firefly and you know, later there was like friends MySpace. These things eventually involved into obviously what we now know as Facebook or meta and snapping, all these things Instagram. But. And one of the, funny things I'll tell you, is this concept of the soda straw link. which is, I use this a lot actually, when I think about founders. It's, it's a person that, is part of some social network. Like, I don't know, like maybe for you it's like your revenue partners crew, but then also. Is connected to some completely different network. Like a lot of times it's immigrant founders who I don't know, they make, you know, let's say come from India so you know, people there. But then you also know people in Silicon Valley or Israel or whatever. And frequently these people actually have an advantage cause they're the soda straw that's connecting together. Two separate groups of people that really don't have any other connection between them. And so it enables them to broker information between these two disconnected networks. And sometimes it lets you see an opportunity that you see in Silicon Valley or in Israel or whatever. Like I'm, I come from Finland, you know, so I, you know, Some of my best investments have been companies like, I don't know, aura, the Ring, smart Ring. It's a finished company that I can then say, Hey, this, these founders are really awesome, but they don't know anyone in Silicon Valley. Let me introduce them to, I don't know, like, you know, Mark Benioff ended up investing or whatever. So, you know, it's like, you know, this is the sodas straw link. It's someone who can function as a broker of information between disconnected social networks and, they oftentimes end up being the most valuable people you can know. So, just putting that out there as a, there's a lot of fun concepts in sociology that I apply in business that. You know, it's like a whole other, sometimes I've thought, oh, this, this could be a podcast, or this could even be a book. You know, there's, you know, a lot of fun things like that. I love it.
Brendan Tolleson: Okay. So yeah, you got the, the sociology background with the parents, the academics. All right. So what, what else you got?
Jyri Engestrom: Yeah, I mean, I just, I'm a, I'm a avid snowboarder. I was just skiing in, in Switzerland. Just got back, it's, you know, it was amazing. my brother is a, a pro skater, a skateboarder, so, you know, he and I get out sometimes still and, you know, we'll, we'll, we'll do some sessions together in LA or Barcelona or other, other awesome spots. So, yeah, you know, it's, it's one of the, Wonderful parts about living in California is that we have access to all. We have access to snow, we have access to the beach, and we have access to, you know, some awesome skate spots. So I try to take advantage of that. That's great.
Brendan Tolleson: Well, let's, let's build off of something you just said, Jyri, around the, the soda straw concept and, and really understanding how that, I guess there are two ways to think about it. One could be in terms of how a entrepreneur thinks about, Capital. I mean, who should they connect with from a VC perspective? There's also where you sit, as the investor, like what, when you think about the soda trial concept of the entrepreneurs that you are talking to, like what are, what are you looking for to connect those dots and say, Hey, there, there is a multiplier effect here, or there's an opportunity, that this entrepreneur, not only with an idea, but in terms of who they have access to, that makes this really powerful. Is there a framework or, or a thought process that you think through on that side?
Jyri Engestrom: Yeah, definitely. I mean, there's, there. I think every VC has some form of like the prepared mind, the kind of famous Excel, idea of, you know, you just get interested in stuff. for example, I'll give you an example. So right now we're funding a, a nuclear power company, which is not making electricity, it's making heat. And it's a new kind of concept for how to use nuclear fish in. It's very simple. It's, you know, need, you don't need to produce steam or, you know, run turbines. you don't even need pumps. so it's kind of a much more simple and frankly more safe way of utilizing nuclear power. But that's come outta, I don't. At least five or six years of thinking about energy. It's like the, you know, it's the biggest thing there is, you know, you think about like how to replace oil. so. I, I don't know. I, my, my way of, of the investments that I love the most are the things where you really get genuinely excited about some space. And then, you know, we look for a founder and, some, some edge there. Sometimes it takes years. sometimes we have to start that company or our own. like this one, you know, it's basically me, finding someone and then saying, Hey, why don't you do this? I think you're the best person. And then getting them excited to actually, you know, You know, incorporate a new, new company and then we fund it. Sometimes I do that myself. Last fund, I think we started three companies where, you know, some of them I'm the CEO of initially, and then, you know, I'll find someone to run them. like primary, primary health, which is, you know, 50 million in revenue or more last year. couple years. you know, I started that company and it's great because we're still the only investors on the cap table, you know? So, I think that what we're seeing now, and this is by the way for if you're thinking about like what to do and so on, it used to be that vs would all only want you to focus on one thing, like just do one company at a time. Entrepreneurs gotta put all their eggs in one basket, et cetera. I think that's totally wrong. I think the best founders always do multiple things at once. You think about like Elon Musk, like how many companies does he run? Like, you know, Twitter, Tesla, SpaceX? Well, you know, he's got someone CEO running who's excellent running SpaceX. But, this is, this is, you know, Jack Dorsey. You think about like, I don't know, Jack, Abram, anyone who's a top founder, it's a waste to have them focus on just one company at a time. So I think we're moving from this era of serial entrepreneurs into an era of parallel entrepreneurs. and so that's, I think that works well for yes. you know, we say yes all the time. It's like, you know, our top founders too, the best founders. They oftentimes, we encourage them to start new things on the side. Some of them actually run their own angel funds even. you know, so it's an era where I would just encourage creative people to kind of, you. Expand instead of contracting and, you know, saying no to things. cuz you can oftentimes, if you're a great founder, and this is another thing that I say often, to our founders, is, look, if you're a ceo, you really only have three jobs. Like, you know, first job, communicate the vision. and if you do that well, your second task is gonna be really easy, which is raise fi, raise the financing. If you're great at communicating an exciting vision, then it's gonna be very easy for you usually to raise financing. And then thirdly, just hire the best people. Now that you've known what to do, you've got a vision and you've just raised the financing, you should be able to go out and hire the best people if you're a great communicator and that's it. That's what you gotta focus on. And if you're doing that job well, then people you hire are going to be able to basically execute on all of the other tasks of the. And so therefore, you know, you can basically just go and do another company or, you know, you can be chairman. You don't need, always need to be the ceo. you don't always need to be operationally doing everything, you know, the full stack. sometimes it's actually better that you let other people, if you're great at delegating than, you know, you can actually do multiple companies at once. And I think this is a new phenomenon, that we're gonna see more and more during this decade where, you know, some of the very best founders, they're gonna be running multiple companies simultaneously.
Brendan Tolleson: Yeah It, to your point, it is counterintuitive. I, I don't, didn't necessarily disagree with it. I think, you know, the, the common objection at least that I would hear is like, focus, and the lack of focus will cause you to implode if you're trying to do too many things at once, but I think your rebuttal to that is that whole, hey, empower and delegate., if you do those three things, will you talk about vision casting funding? Mm-hmm. and, you know, rallying the people around you, then you're, you're actually able to do both well,
Jyri Engestrom: Yeah. Yeah, it's not always the case. There's always exceptions to the rule, but I used to very much believe that you had to focus and do one company at a time. And, you know, I constrained myself, you know, as a founder. some of my best ideas I didn't pursue because I thought I shouldn't do that. I thought it was moral. You know, somehow suspect that I, cuz I had, I was running a company, right? And I look back and I'm like, wow. Well that was kind of a dumb thing to do. I could have easily, you know, gotten involved or at least Angel invested or put together. And, you know, some of my, my own, you know, best investments, you know, I, my, my own company's returned money to me. But it's another thing, like if you're a founder, you should probably be very actively. Investing advising other founders. And it took me a while to realize this, and I have certainly made more money from my tiny angel investments into some companies that got really massive, than I have from my own companies, even though I made money from them too. But, you know, ultimately their exits were, you know, an order of magnitude smaller than some of these other ones. And. And I've learned so much from those, those other founders. and it's sometimes, you know, so it's all really about building a network in the sense that it also makes it easier for you to hire, you can actually go and work in some of those companies. Like, you know, I went and I was the head of product, at my friend's company for a while, and then I switched out. So, you know, this idea of things being pretty fluid and you being able to be an investor, be a founder. Maybe even run a fund. Kind of do a lot of things simultaneously. If you look at the very top, most successful people in Silicon Valley, look at our Reid Hoffman. Look at an musk, look at. All these people do many things simultaneously. And so I just think that's really, and it also makes things more fun. You know, you're basically accessing, coming back to that social networking idea of the sodas drawing, they're injecting themselves in multiple information flows at once, which gives them advantage cuz now they know what's going on in AI and they also know what's going on. I don't know, in the world of SPACs, like when SPACs became a thing, You know, you saw like, I don't know, Reid Hoffman, mark Pincus, you know, Chamath, like, they were the first to start doing SPACs, you know?. and that's usually when you have the biggest advantage, right? The people who come in later are just gonna be basically learning from you, copying you, et cetera. But not necessarily, they don't have as much upside. And so that's another ] thing is like, you know, usually, who's first to a new thing? It's someone. Is so well connected that they've been able to spot it before others. And obviously for a venture capitalist, that's sort of what it's all about, right? You wanna find the opportunity before your competitors do. So, you know, like I, I have, we live in Paris, we live, I have a house in, in Helsinki, in Finland. my home base is San Francisco, but nowadays, you know, even though I, I invest very early stage, I find that it's possible to stay in the information flow in those other places while being here because everything is online, and it allows me to make these connections. Like I was mentioning, for instance, for this company, aura, the Smart Ring. Or you know, like now we're building this nuclear power company. You know, it's just possible to get a lot more done if you allow yourself the freedom to basically not limit yourself by thinking that you have to focus on something that you really probably don't.
Brendan Tolleson: We could have a conversation about this for a long time, and I, I, I love, it's an invitation, I think for people to think differently. and it's always helpful to see practical examples of how others in, in the Valley are, are doing that. and encourages me, even as a founder and, and thinking through what, what we've built three companies in two years. And, sometimes it feels like that's a lot, but, to your point, there, you do it the right way. Doing it. Yeah. Yeah, exactly. well, you're, I really appreciate you stopping by. as we kinda go into the final lap, if, if, if our audience wants to engage with the Yes VC or learn, you know, more from you, what's the next step they can take?
Jyri Engestrom: Yeah, just, hit me up on Twitter. It's @jyri or email us at Partners@Yes.VC. We read everything. We can't respond to everything, but we read everything. So look forward to hearing from you guys, and thanks so much for having me on the show.
Brendan Tolleson: Yeah, likewise, Jyri, I really do appreciate your perspective, you certainly bring a unique background, and congrats on your success and I, and I'm confident it will only continue in light of what we discussed today. So thank you so much.
Jyri Engestrom: Thanks.