JD Ross on Atomic's venture capital strategy

Transcript

I'm J.D. Ross and I'm a general partner at Atomic Ventures. So Atomic is on one hand a venture capital fund like any other fund, but instead of investing in any company, we only invest in the companies that we start. Instead of requiring our investors to come find us for each company we start, we pool our talents together, create new companies, and then invest on preset terms at a large discount to what someone could have invested in with us as LPs kind of coming in as a fund structure. I think what you noticed in San Francisco is every year there may be 10 or 20 companies that get founded that drive the returns of the entire market. And all of the best venture capital firms are fighting to get into those very limited number of deals as entrepreneurs leave. And we said, well, it's easier to create one of those than to fight to get small allocations. And so at Atomic, we strive to create one or two or three of those 20 multibillion dollar industry defining companies every year.

Entrepreneurship is an active invention. There's some art and science to it for us in Atomic. We either start with an idea or we start with people. And so sometimes someone will come to us, an entrepreneur, with it, with a very loose idea or some area they're interested in. And we'll say this is one we want to, but we want to co-found a company with. And then we'll start playing with different ideas. We'll run through 10 or 20 different iterations of ideas with them in Rapid Fire. And on the other side of it, we might have an idea of exactly what we want to start. And then we're going out, we're hunting. We're finding the exact person who should have come and pitched that idea to us. In a dream world, we're going to recruit them out of wherever they are to become the founder and CEO of that company.

I think at any given moment in time; there's some major change happening in the world. And the job of an entrepreneur is to see where you are in that wave of innovation and create basically find a way to capture or create the value you can for people given those given the new world that's behind you. So, for example, at Atomic in the last few years, a lot of that's been around real estate technology and telemedicine and enterprise eCompanies companies. There are a number of changes, legal changes, regulatory changes that enable us to do direct consumer telemedicine that weren't easier possible in the past. And at the same time, you have consumer preference shifting from having one doctor that kind of manages your life to being driven by a more specific situation. So either I want to manage my diabetes or I have an acute problem with erectile dysfunction or hair loss. Right. These are things maybe are embarrassing to share with the doctor or deal with or they're complicated in nuance and maybe your doctor isn't suited for that. But you can now go online, be connected with the program or doctor or group that is extremely expert in that thing, get better care for a lower price. So telemedicine doesn't double wave of both consumer preference shifting and regulatory tailwinds behind it.

The good firms and the good managers are partners with these entrepreneurs in a much deeper way than capital. We drive returns. We don't capture returns. Nothing is more true than an atomic where we are literally the co-founders of these companies and are in there from day one with our co-founders building these companies up. I spend, you know, 70 percent of my time with the teams that we're starting and building and growing in the trenches with the entrepreneurs and acting as highly leveraged as I can. But coaching, mentoring, training, hiring, recruiting, as well as deploying capital when it's appropriate. I think one of the reasons atomic works is because the people at atomic work. A lot of venture capital firms view their job as capital allocation, which is their job. That's what they go out and pitch. We do our jobs as entrepreneurship. We actually we get in there with our companies and we act as founders. We act in the same way that any other founder would act. And that's really important in building a company was easy. There would be a lot more of a maybe, but it's really difficult. Starting a company is really hard, growing companies really hard. You need to put your full focus on that at a time. We're entrepreneurs first and investors second, and we think that's going to drive the best returns for ourselves and our LPs.