Nylas Alumni Fund: Investing in Former Employees

Hello and welcome to Pipeline. My name is Biz Carson, and I’ve listened to Beyonc sing “You won’t break my soul” too many times to count this week. On a quick maintenance note: Pipeline will be out of service next Saturday for the holiday weekend.

This week in the startup world: Palmer Luckey fires back; Tomasz Tunguz steps back; and Nylas has his employees’ backs.

When a “friends and family” turn includes your ex (-employer)

Most companies don’t give ex-employees money to leave and start their next business. They are more often willing to spend to pay and retain them, and even launch fancy “intrapreneurship” programs to keep startup ideas in-house.

Nylas CEO Gleb Polyakov takes the opposite approach. If his employees want to be entrepreneurs, then they should “get out” of the business and go pursue their passion, Polyakov told me. In fact, Nylas will give any former employee who starts a new business at least $20,000 to continue it under their new Nylas. Alumni fund.

“It’s very HVAC-feeling except being that it’s not,” said Polyakov. “The mandate here is employee growth and spread betting versus ‘Here’s an M&A pipeline.'”

  • Many other venture capitalists bet on former employees, but their goals are often strategic investments in aligned products. Cisco was once well known for its spin-in program to agree to buy startups once they hit a milestone, and that still supports a lot of alumni.
  • Other graduate-focused funds are managed by former employees investing in their peers, not supported by company resources. Groups led by alumni of Uber, Airbnb, Palantir and Google have sprung up to invest in the next wave, hoping to recreate the success of the PayPal mafia.
  • In the case of the Nylas’ Alumni Fund, it is a global offer to former employees, regardless of what they are building. The only two rules are that the company cannot be a direct competitor and that Nylas will not direct or price the tour. Prior to the program’s launch, former employees built a rowing platoon and a startup that places artwork as computer background screens — things that aren’t in the company’s M&A pipeline. API maker, but would be supported under the Nylas Alumni Fund if launched today.

It admittedly took a little while to sell the CFO on it since a startup investing $20,000 checks into non-strategic startups formed by former employees is not your day-to-day financially sound decision (especially in a market like this). But Polyakov sees it as the price to pay for recruiting talent with the potential for financial reversal.

  • As CEO, he takes a pretty realistic view that most people don’t spend more than five years in a job before moving on. Her goal in this window is to help them advance in their careers and develop them so that they are ready to “graduate” and move on.
  • “My job as CEO is to make people as rich and famous as possible,” Polyakov said. The standard route to achieving this is to make Nylas a hugely financially successful company and a workplace that’s a badge of honor akin to a Google first term on someone’s resume.
  • But the fund offers another avenue, supporting employees who go on and start something new. “What I’m most proud of is seeing people reach or exceed their potential and go out and do cool things,” Polyakov says.

The Alumni Fund is less a risk bet than a talent game, but it is still the one that could have a good benefit for the company. If PayPal had invested in each ex-Paypal company created, it would be based on stakes in hundreds of companies collectively worth billions. Polyakov makes the bet here. “I just guess that if we liked them and they were employed for a long time and they were successful here, their business probably has an inordinate chance of succeeding,” Polyakov said. “So we have access to some interesting start-ups.”

Understood

It’s not a tech conference until Peter Pham is spotted on the dance floor. He was just one of many sightings at parties at New York’s NFT.NYC event, which included Leonardo DiCaprio and Gigi Hadid. Biggest of all was when Snoop Dogg walked in – or should I say a paid professional impersonator pretend it was his name Doop Snogg. NFT jokes and the crypto bubble wrote themselves.

Is this the record for most lead investments listed on LinkedIn? BTV’s Sheel Mohnot Point that Tiger’s John Curtius has 172 deals listed on his LinkedIn page. It’s a pretty robust work experience section.

“Founders should very aggressively fend off talking heads who try to destroy them,” Palmer Luckey of Anduril tweeted. “Don’t make the mistake I made, which was to wait until they poisoned investors, employees and the media against you.” The Oculus co-founder decided the time to push back was at the All-In Summit in Miami last month when Luckey started reading all the negative things conference co-host Jason Calacanis said to his subject over the years. The video was just released on Wednesday, so if you want to watch billionaires battling each other on a conference stage, the Luckey vs. Calacanis drama begins at 9:45 p.m. mark and it is a conversation worthy of attention.

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inside track

If a company wants to digitally transform, it needs to “find the smartest technologist in the room and make them the CEO,” says a16z. Marc Andreessen. In a new interview with McKinseyhe talked about having an open mind and the two mistakes he sees in venture capital.

If you’re trying to raise money, get advice from an investor, not just money, says Scale co-founder Lucy Guo. She has now raised funds for two companies and been on the venture capital side, so she shared his advice on how to pitch as a founder and generate FOMO.

Do you know what DPI, TVPI and MOIC are? Venture capital already involves a ton of jargon, but this week Codie Sanchez is broken down 16 Terms VCs Know but most investors don’t.

“In 2001, I thought the world was going to end. In 2008, I thought the whole financial system was going to collapse. When cleantech imploded, I thought my career in venture capital was over. And when COVID started, I thought we were all going to die. So in that context, I’m fine,” says Khosla’s Samir Kaoul, who discussed ups and downs to navigate market volatility.

must know

Accel has raised a $4 billion fund. Discreetly announced via a blog post, the money could position the company as well as Tiger and SoftBank are moving away from the money-splatter game.

Redpoint’s Tomasz Tunguz takes a step back. He continues with the company on a short-term basis as a partner, but gives up some of his responsibilities, Forbes reported.

In other power changes, SoftBank’s international CEO is leaving after five months on the job. Marcelo Claure’s replacement has decided to follow in his footsteps and leave to seize new opportunities. Another SoftBank managing partner, Alex Clavel, takes over as head of SoftBank Group International.

$12.8 billion up in smoke. Dan Primak declared Altria’s 2018 investment in Juul ‘worst corporate investment ever’ after FDA order Juul’s products left the US market this week.

Bolt makes a buyout. The start of payments is share buyback offer from dismissed employees who had taken out loans on their shares. The company said no former employees are underwater on these shares due to the low exercise prices they paid.

From the protocol: You want silicon? How about a plate? Startup Cerebras has developed a piece of silicon a foot wide, compared to average chips measured in millimeters, that makes AI training easy and inexpensive.

Also on Protocol: The next wave of social apps are all about authenticity and friends, with one even going so far as to ban selfies altogether.

Your reading of the weekend: Have you tried Google something lately only to be frustrated that the results seem like ad-laden pages or just feel bad? You would not be alone. It’s an “open secret”, Charlie Warzel written for the Atlantic, that Google search isn’t what it used to be. The question he explores is why.

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