Click to listen to the latest episode of The Richards Report with Nick Crocker from Blackbird Ventures.
Nick Crocker originally studied law and political science at UQ. After a short time working in law he pivoted into the world of start-ups. He was co-founder and CEO of Sessions, which used technology to help people stay healthy. MyFitnessPal acquired Sessions in December 2013. Nick also co-founded We Are Hunted, which was acquired by Twitter.
Nick’s now a partner at Blackbird Ventures, a venture capital fund that seeks to invest in world-class founders who are setting out to make a difference in the world. Investors in Blackbird’s fund include the Australian Government Future Fund, Host Plus, and Mike Cannon-Brookes.
I ask Nick what's more enjoyable; being a founder, or working with founders and investing in start-ups? Nick said he prefers investing in start-ups. He says being a founder can be exciting, but it also entails a never-ending set of problems. The further you get into building a company, the more challenging it becomes. From Nick's perspective, the hardest part of being a founder is the constant need for emotional resilience, a load that outsiders often underestimate.
We discuss investor patience and the need for Nick to take a long-term view, as the road for start-ups is rarely smooth. Blackbird often takes a 10-year time horizon with its investments.
Their process for due diligence has similarities to the process Ray Dalio uses at Bridgewater. It also draws inspiration from the book The Checklist Manifesto by Atul Gawande. They run and monitor this process on Process Street. When they're finished, each partner rates the business over 75 variables and records their view, which is logged so it can be shared and reviewed. Over time this data set is being built on and optimised.
Nick said he would come into contact with approximately 1000 companies a year, meeting face to face with about 100. He would probably consider around 10 but ultimately invests in two or three a year. However, at the time of recording in late September he still had not made an investment this year.
One thing I didn't realise was that Nick measures every minute of his day and he takes us through how he does this. When he only invests in an average of in every 500 companies he comes across, he knows the importance of time management.
We discuss valuation, which is always difficult, let alone investing in a start-up company that’s probably loss-making at the time with few true comparables.
Nick describes the importance of a well-articulated mission and vision. However, so often they’re nothing more than buzzwords that are stuck on the wall and then forgotten. It’s important though - the mission and vision reverberate throughout the company and help attract the best talent, which can attract investors, which can help in the process to attract customers.
Blackbird now has 60 companies in its portfolio. Some of its marquee investments include Canva (an Australian company out of Perth that specialises in helping people with graphic design online. If you’re interested I highly recommend this fascinating podcast episode with Melanie Perkins on How I Built This). Culture Amp is another marquee investment doing some great things in the world of measuring culture and performance within teams.
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