Sar : Felicis raised its first institutional fund in 2010. I hold the view that Felicis is still one of the most underrated firms in SV given the impressive history. Most of the senior leaders are immigrants. You have been there for nearly 8 years now. That’s longer than most people at the firm right now. Besides the founder and early team, you likely have the most context on how the firm has evolved. Looking back, what do you believe had the greatest impact on creating path dependence that got you guys where you are today? Little things, set up stubbornly early on, can often make the greatest difference. I subscribe to the idea that products reflect internal organizational dynamics more than we think.

Dasha : I tend to agree with you. Since the venture “product” is largely people, a firm’s culture -- including individual personalities and interpersonal dynamics -- drives more than most might think. Didier Elzinga, co-founder and CEO of Culture Amp, said something that I reflect on almost weekly: “Brand is your promise to your customer; culture is how you deliver on it.” In venture, “brand” and “product” are nearly interchangeable.

Interestingly, there’s very little written about venture firm cultures. Venture is like a series of black boxes that are slowly being opened up to show the inner workings, except for this one.

Our most cherished core value at Felicis is “learning and adapting rapidly.” More than any single decision, normalizing change and forward progress has been essential to getting us to where we are today. It’s given us the meta skill of constantly experimenting, looking at data, and adjusting course as needed. If we find we’re doing the same thing we were doing two years ago, for us that’s not fun. It means we’ve ossified and that’s not good.

Paired with another Felicis core value, “challenging the status quo,” we’ve created a culture where we are constantly pushing on the edges of our comfort zone. This enabled us to take smart risks and make decisions that oriented Felicis away from its micro VC peer set pretty early on.

We also have a team-oriented culture that we fuel with transparency. We are not a collection of lone wolves or individual superstars. When Aydin started Felicis, he wanted to build a diverse team from the start in which everyone maximized their potential. And what good is it to have a diverse team if peoples’ voices aren’t heard? So we give our team a lot of context and trust them to use it in service of our collective mission.

One definition of happiness that I really like is getting to choose your problems. For Felicis, having many different personalities and voices around the table comes at a cost: it sometimes takes us longer to get everyone on board. We need to make space for debate and different opinions. There are some companies we may not back as a result. And we’re OK with this because of the benefits this approach has brought us in terms of our decision making and our reputation. We win together and we lose together, and I believe founders can feel this unwavering commitment from the whole team.

Sar : You brought up this idea of adapting. That brings us to my next question. I have always found it funny how the business that makes money changing the status quo has been one of the most hesitant industries to embrace any sort of change. The industry operates more or less the way it did in the 70s, 80s and 90s. It took a global pandemic to realize taking pitches on a video call and wiring the money is an option! Even when you look at the types of roles firms hire for, the greatest change has been more non investing roles for community, content and BD in the past 15 years. Which is embarrassing if you ask me! Do you have a perspective on why that is the case?

Dasha : In my opinion, it comes back to internal dynamics: who makes decisions, who controls resources and what people are incentivized to do. If those in power don’t value innovation and are solely driven to make money for themselves, it’s unlikely that once they find what works for them, they’ll suddenly be excited to give resources to other team members -- especially non-investors -- to run experiments. I imagine firms that operate like a collective of siloed individuals struggle with this.

Venture has very long feedback loops and is set up to move slowly. Even if you did want to experiment, it’s difficult to know if what you’re doing is really driving impact. So if you don’t have a culture that values building, the structural inertia will prevail. It leads to a lot of “copy/paste” behavior. I’ve always gotten a kick out of seeing what happened when Sequoia reworked their website. Inevitably 2-3 months later, several other firms rolled out redesigns with the same elements..

My partners have always encouraged me to look for ways to improve our processes and to listen for things founders need but aren’t getting. I’ve personally been supported in crafting a unique role for myself, unconstrained by “typical” titles and scopes.

All of this set me up to create our 1% founder development pledge, which has been one of our most impactful initiatives to date. Felicis commits 1% on top of every first check we write in non-dilutive capital for founders to spend on their own development (exec coaching, therapy, peer circles etc).

I’m certain there are many highly creative people working in venture who are just not empowered to nurture and explore bold ideas that would benefit the ecosystem, which is a shame, because there are so many stale constructs that need to be reinvented and repackaged.

Sar : There’s two schools of thought on what being a good firm means. The lens of “good” is often “value add” unless you are already an established name and can sustain the halo effect of your association with well recognizable companies. One school of thought says there’s no need to be structured about the value you bring. The value is the individual and everything they bring. The other school of thought says there’s a need to be structured and more legible for what the value is and that often means decoupling it from an individual investor. There’s a spectrum of perspectives on what that looks like and how it is practiced. Can you tell us a bit about how you view the craft of venture through that lens and what that means for Felicis and how your role has evolved?

Dasha : I describe the Felicis mission as “success with empathy.” There are a lot of ways to make money. There are a lot of shortcuts one could take. We want to continue delivering incredible returns to our LPs while doing so with empathy for the founder journey -- it’s not just the “what” of performance, but also the “how” of our reputation. At the end of the day, it’s not about what multiple we made or how much “value” we added; it’s about whether we felt proud about what the founders we backed had to say about partnering with us.

I think about venture in chapters. Chapter one, capital wasn’t yet as plentiful, so it was a differentiator. Chapter two, services were new and exciting and were a differentiator. Now we’re in chapter three and investors are realizing that there’s something even more foundational than capital and “value add,” and it’s something that we at Felicis prioritize above all else: trust.

So we can talk about the Benchmark to a16z spectrum and debate the merits of each extreme, but we’d miss the more important point: without trust, you’re building on a crumbling foundation. Put differently, not even the most amazing services team can salvage trust if the behavior of a board member breaks it. It’s not about volume of activity; it’s first and foremost about whether a founder feels you have their back. Then we can talk about quality of impact, which can all come from a single investor or from multiple people in a firm. Either way, you do need to effectively package and distribute your message about why founders should let you onto their cap tables.

The investor-founder relationship is special. I strive to amplify and augment that relationship without creating noise or overhead for founders. Some firms over-rotate on services, probably due to thinking some things are table stakes without actually asking founders. This can create perverse second- and third-order consequences. Every person you add to your firm wants to do good work, but it can become a runaway train: all of a sudden you have tons of transactional intros, but when you step back and consider it from a CEO’s perspective, the signal of the impactful stuff has been lost in the noise. And even worse if in parallel, your board member is voting to oust the CEO.

Coming back to my role: Founder Success is analogous to Customer Success, but as we’ve discussed, there’s also some Product in there. It’s not only ensuring that we are exceeding expectations for founders we’ve already backed, but that we are taking their feedback and using it to improve the unique Felicis product. The fun part is that while we can build scalable and repeatable offerings for some portion of founder needs, I also keep a fair amount of slack in my schedule for high importance, high urgency stuff. In a large firm, you might be tempted to throw an “expert” at it. But we are small, and this constraint forces us to understand the unique nuances of each situation and creatively solve it like a novel problem...which I find leads to better and more memorable outcomes.

Sar : You mentioned Customer Success. That brings us to my last question. There’s this uncomfortable and often polarizing debate in venture about who is the customer. Is it the founders or the LPs? The easy answer would be to say both. I suspect that sounds right but really isn’t for the same reason a marketplace faces the inherent tension in whose interests they should look out for when push comes to shove. There’s a lot of room for misalignment. What is your take on it and how does that impact your work? Your title obviously gives it away but I'm still interested in the thought process.

Dasha : At Felicis, it’s very clear: founders are our customers. Their success drives our success; LP success does not drive our success, though it enables us to keep working for it. VC firms that treat LPs as customers are the old guard; they think founders are assets to be controlled and monetized, which creates tremendous misalignment.

We have fantastic LPs who trust us to make decisions. We are stewards of their capital, and we have the good fortune of selecting LPs who are aligned with our values and strategy. They supported us when we announced we would vote our shares with founders. If we were to burn our reputation with a founder by putting his or her interests second, that harms our future ability to be trusted by the next great founder. That’s not good for us nor for our LPs.

Of course, your culture is your tradeoffs and sometimes we have to make tough calls. My partner, Katie Riester, serves as the voice of LPs in our internal discussions and I serve as the voice of founders. This sort of inclusion ultimately enables us to make better decisions in service of our mission.