Shaper: Danny Rimer

Show aired on 12th January 2019

Transcript

Elliot Moss
Welcome to the Jazz Shapers podcast from Mishcon de Reya. What you are about to hear was originally broadcast on Jazz FM however music has been cut or shortened due to rights issues.

Welcome to Jazz Shapers, where the Shapers of Business join the Shapers of Jazz, Soul and Blues. Our guest today is Danny Rimer, a partner at Index Ventures, the venture capital firm helping entrepreneurs to turn bold ideas into global businesses. Danny joined Index Ventures in 2002 with the firm founded by his brothers, Neil and David and a third business partner, Giuseppe Socco back in 1996. Danny established the firm’s office in London, then San Francisco and current investments include 1stdibs, Discourse, Farfetch, Good Egg, Grailed and Scooped to name but a few. Previously Danny has been general partner of venture capital firm The Barksdale Group and a director of, amongst others, Betfair, Dropbox, Etsy and Sky and formerly on the Board of Trustees and at the San Francisco Museum of Modern Art and Maggie’s Centres which provide if you don’t know, free support to people with cancer and their families. Danny once said he thinks you can figure out if an entrepreneur is going to build a great rocket ship business within the first fifteen minutes of meeting them. We’ll find out how he manages to do that in just a few minutes time. Hello.

Danny Rimer
Hi there.

Elliot Moss
It’s great to see you, thank you so much for coming. I’ve heard lots about you because as we were saying just before we turned the things on, it’s a small world and the world of putting money into businesses and business founders and helping things flourish is, is specialised. Tell me how you got into this crazy world sixteen years ago and I know you were doing a bunch of stuff before that, but just tell me about the Index Ventures beginning?

Danny Rimer
Yeah you are absolutely right, it is a small community and what’s amazing is it’s a small community across continents. I got involved because essentially I had come to the realisation that I just wanted to help entrepreneurs and I wanted to get closer and closer to the source of actually the creation of companies and creation of entrepreneurialism so I moved out of banking and then, where I was in equity research and then I tried to work with some operators who actually run and build companies and thought they’d be great venture capitalists and then concluded that actually the best way was to join folks who were like me, more interested in helping entrepreneurs rather than, rather than operators or entrepreneurs themselves.

Elliot Moss
Now the accent gives something away but though we’ll talk about geography I think it’s an interesting thing to me about where you’ve lived and also where you were born and so on/ Canadian?

Danny Rimer
Originally Canadian. I was born there and my parents moved to Geneva when I was nine months old so I have the passport which is really nice for US Immigration but actually I’ve never lived in Canada.

Elliot Moss
And in terms of the San Francisco piece, because you opened the office…

Danny Rimer
Yes.

Elliot Moss
…for Index Ventures in San Fran. That happened roughly when, what year?

Danny Rimer
2011.

Elliot Moss
2011 okay. So for nine years, your first nine years in Index Ventures you were based in London?

Danny Rimer
I was based in London and doing an awful lot of flights back and forth.

Elliot Moss
Now I should actually ask you, just in your own words, describe Index Ventures to me and then those people listening who won’t know exactly what it is?

Danny Rimer
I guess the world of venture capital has gotten better known in Europe. It sometime is confused with Dragon’s Den, the thought of you know, you have these people who have these stacks of money and they are doing a favour to entrepreneurs by giving them that money but actually our approach is totally different which is you know, we have to convince the entrepreneur that by taking our money they are going to get an incredible amount of service that will make their enterprise a lot more successful. So that’s what we started off with, taking that Silicon Valley style approach and applying it to Europe and so Index started with those roots, a bunch of Europeans trying to adapt Silicon Valley style investing to Europe and then from there realised that in order to make our European entrepreneurs as successful as possible we were going to have to open a West Coast office so that we could help them be successful in the US and as a result of that we had to do what we ask our entrepreneurs to do, which is move ourselves rather than hire someone to pitch a flag and say that they are Index Ventures in the US.

Elliot Moss
And just to give a flavour and we will be talking a lot more about this, the kinds of businesses that you’ve been involved in, Deliveroo is in there, Farfetch is in there – give me a couple of your other highlights and I know you are going to say ‘but all my businesses are highlights Elliot’ but I know that aside…

Danny Rimer
You are absolutely right.

Elliot Moss
…I know they are all your children.

Danny Rimer
Let’s see, there’s, you know what’s interesting about us I guess is that we do both enterprise business as well as consumer businesses so other consumer businesses are Candycrush, Clash of Clans, Net-A-Porte, Revolute, a company called Robin Hood which is a free brokerage account in the US and then on the enterprise side, Dropbox. Let’s see, there are a number of them.

Elliot Moss
There are a number of them, we are going to come back but there are some big names for you just to give a flavour of the billions of pounds that have been invested over many, many years. You went to work with your brothers?

Danny Rimer
Yeah.

Elliot Moss
Often I meet people in family businesses, yours is a little bit bigger than that in the sense that yes you have family principals, ALS, I am sure you have family principles, LES as well but tell me a little bit about what it is like to work with family and what that experience has been for you?

Danny Rimer
I mean it has been a blast so the idea of being able to have some family members that are part of a partnership, there is really no further control that we have, we are just, at one point we were three of seven partners and now we are two brothers of nine partners. It’s fun. It doesn’t really change a whole lot except that it means that you trust the person wholeheartedly and there is a lot less, I think, business politics or company politics. So that’s, that’s what at least what we enjoy but also what the partners who have joined and everyone who works in Index really talks about is that it creates a different type of atmosphere.

Elliot Moss
And I imagine yeah that’s quite real, it’s like sitting round the table having dinner or lunch. It’s the same thing, you are not pretending that you are doing some kind of job, this is just what you guys do?

Danny Rimer
That’s what we do and we love it and you know the fact that, yeah you can actually try and build something with someone that you love or many members of your family that you love creates the right atmosphere. So you end up being very close to not only them but the other partners who come along because you are expecting to be super close to them and you are in it together, you know, at Venture World we, we just talked about a number of hits that we’ve had but let me tell you, for every one of those hits, there are great entrepreneurs who have worked with us and they have been significant failures so sometimes you need a group around you who are going to commiserate and have the right approach to that.

Elliot Moss
These failures, just for a moment. Obviously it does form the outside world look glossy and like a kind of Sky Atlantic you know, documentary ‘here’s another person that Index Ventures have picked up and they’ve invested in’. When it goes wrong, how do you as a group manage that and is that emotionally hard as well as financially hard?

Danny Rimer
Yeah absolutely. It’s hard in both dimensions. It’s a sort of contract and pact that you have with the entrepreneur that when they accept to take your money you are going to do everything you can in your power to help them along the road and make it a success and not only is the individual partner whose on the company’s board really committed but so is the rest of the partnership. So when it goes wrong it is indeed emotional for sure but it’s also the reality of the situation and I was referring to before that, prior to joining Index I worked with these great operators; one guy had fun Federal Express, another one had been the CFO of AT&T and I thought that great operators would be great venture partners because they know how to operate businesses and could provide a lot of counsel but the reality is an operator just wants to keep on hacking away until they make it a success and as a venture capitalist you know we have a portfolio and we have to figure out when it’s time to look at the entrepreneur in the eyes and say look I love what you’re doing, we’ve tried really hard, we’ve learnt a lot, there are great members of the team but let’s either use the last money in the tank that we have to try something completely different or let’s just call it quits and think about something else that we should do. And those are really tough conversations.

Elliot Moss
Behind that is the flip for this which is picking winners and this isn’t a gambling shop where we are looking at horses and we know a little bit about horses, much more than that. If there were three things that you look for as you look in the eyes of the entrepreneur at the beginning of the process, not the end where you are saying listen this is just not going to work or congratulations we’ve just done X,Y and Z. What would be the top three things, and I am sure there are more than three but for you?

Danny Rimer
Yeah, I mean Elliot, as you mentioned, you start it off with the people so it is fundamentally going to be about the entrepreneur more than anything else. Really, it’s trying to understand the entrepreneur, what’s driving them. A big question there is what’s the level of passion, has this person been placed on this earth, as far as they are concerned, to disrupt this industry. You know, is it bothering them so much that the status quo is so terrible for the customer that they have to explode it and start over and that’s what we saw with José from Farfetch, you know, the guy was a shoe manufacturer in Porto, Portugal who had taught himself how to use a computer and he looked at the industry and said ‘My god, this is just terrible across the board, we have to rethink this industry because it’s’, as he always talks about it, ‘it’s a beautiful industry but we have to rethink of it from the ground up and start over using technology’ and so his passion was clear that he was going to try and make this successful and go through ups and downs no matter what. Conversely, sometimes an entrepreneur will come in and say ‘This is a beautiful business and if we just work on this for three/four years I know I can sell it to Google or Amazon or Facebook, it’s just such a valuable asset that this is going to be a success story and it’s going to be a great return’ and those folks we say ‘thanks very much but you are going to have to find another partner’ because fundamentally you can’t really build something of substance if your desire or your goal is to sell it, it’s just not going to happen. I mean, it might happen, you might be incredibly lucky and certainly luck is in every one of these situations but to expect that you are going to build something and package it up nicely so that someone else is going to buy it, it is super unrealistic.

Elliot Moss
Stay with me for more from my Business Shaper, that’s Danny Rimer here. He is a partner at Index Ventures and apparently, Danny, one of the best bits of advice you were given was from your mother who said ‘Be passionate about whatever you do’ and that’s just come out in the last answer to my question. There you go, he’s on message, very good. Stay with me here on Jazz Shapers and Jazz FM. Much more, as I say, from Danny coming up in a couple of minutes but first some words of wisdom for your business, your burgeoning business I hope, from our programme partners at Mishcon de Reya.

There are many ways for you to enjoy all our former Jazz Shapers and indeed to hear this programme again. You can ask Alexa to play Jazz Shapers and there you can hear many of the recent programmes or if you pop Jazz Shapers into iTunes or your preferred podcast platform you can enjoy the full archive and I think there are around three hundred and fifty. But back to today’s guest, it’s Danny Rimer, partner at Index Ventures, the people behind the people who are doing interesting things and these people do interesting things to make sure they can do interesting things, these entrepreneurs. We’ve been talking about backing winners, the other thing implicit in that is firstly, as you said knowing to have the next conversation, a difficult one which is thank you very much, we’re not going to go any further, but there must be other things in between that where you have to exercise a lot of patience. Tell me about patience and your attitude towards it because it strikes me behind the scenes and behind you biting nails and everything else, you are actually very calm. You strike me as a calm kind of guy.

Danny Rimer
Thank you.

Elliot Moss
Obviously, you are just acting really well.

Danny Rimer
It’s clearly the jetlag.

Elliot Moss
It’s not true. But seriously, that kind of sense of perspective that you need to bring, how do you ensure that you hold the line?

Danny Rimer
I mean, my wife is a yoga teacher.

Elliot Moss
I read that.

Danny Rimer
You know, so obviously some of it is rubbing off. To your point about patience, it’s sort of a strange thing because I think being a venture capitalist is the perfect job for someone who’s got ADD, you know, you are constantly looking and juggling different businesses, different people, figuring out how much to spend time sourcing new deals, how much time to spend on the existing companies, how much time to recruit great people for those companies because fundamentally it’s all about people. So, it really lends itself to folks who have difficulty being very mono-tracked but rather really enjoy having multiple balls in the air all at the same time, all at different levels of success or failure. That’s on the one hand. In terms of the entrepreneur, one has to have a lot of patience because obviously they are the ones driving the bus so, you know, as much great advice as I might have, the reality is sometimes it will sink in, sometimes it won’t but they’re going to have to make those decisions. So, sometimes it’s a question of sort of highlighting through pattern recognition and instinct what you’ve seen before and how you think this might be an accident about to happen but having to wait until they actually get into that accident themselves to realise…

Elliot Moss
Or fix it before it happens.

Danny Rimer
That’s right.

Elliot Moss
And that brings me onto the craft skill, again there’s, it’s a pretty opaque thing for me outside in terms of what exactly do venture capitalists do? You kind of know that sometimes they do it well and sometimes they don’t. You’ve touched on a few of those things but the craft skill at the heart of it, you talk about advice. Is it the pattern recognition piece? Is it the people skills? Is it the understanding how to read the numbers? Is it all of those things and what else is it if it’s not just those things?

Danny Rimer
So, I think it’s a combination of all those things. I think that a part of the job is that you are never, I mean I certainly don’t feel like I’m really fantastic at my craft, it’s something that is always humbling.

Elliot Moss
You’ve had a very shabby record. I mean, I must admit, Index Ventures it’s just not successful.

Danny Rimer
There you go. No, no no, No, but it really is one of these things where there isn’t a specific approach that you can take. It really depends on the individual. Certainly when it comes to me, as you can tell, a lot of it is about trying to figure out the entrepreneur, trying to figure out whether they really have that deep knowledge and interest and mind-set to be strategic about the industry and whether or not we are going to be able to work together because it’s a long ride to make it successful. I mean, sometimes you might have companies who do well in a very short period of time. I mean, we invested in Skype way back when and in two years it was a phenomenal outcome for us and, of course the entrepreneurs. But sometimes it takes a long time. I mean it can take twelve/fifteen years. We just took Sonos public which you might be familiar with.

Elliot Moss
I might have in my house.

Danny Rimer
Right on.

Elliot Moss
Very exciting. And I operate it from my phone and my iPad, it’s very good, it’s very cool.

Danny Rimer
Thank you. There you go.

Elliot Moss
It’s an amazing business.

Danny Rimer
Yeah. So, we were in that for fifteen years. You know, my partner Mike Volpi has been working with the Founder for a long time and then the new CEO for the last three/four years, so it takes a lot of time but as long as you keep on seeing the success, you are certainly not going to call it quits, you just want to double down.

Elliot Moss
These journeys have, as I have been talking to you and said ‘I’m Canadian but I lived in Geneva, I’ve then been in London, I go to San Fran’, I wanted to pick this up. Is your movement around the world and your vista as kind of an outsider, very useful for you? Have you thought about that consciously?

Danny Rimer
Yeah, it’s a really critical part of our approach and my personal approach but the outsider is a really good term because for us we sort of feel like what’s difficult is to make sure that you have perspective and you are able to not only have perspective with respect to an industry and with respect to what can work but also with respect to the entrepreneur because you are working with them, so we view the outsider element really good you know, in the US folks think that we are Euros and in Europe they think that we are American and in both cases we are really comfortable with the cultures in which we operate but we also like the fact that it’s not our culture so that we can have a little distance from it and try and understand how what works so that was actually one of the tougher parts for me about living in Silicon Valley is that it’s really such a one industry town and everyone is in tech, you know, you get up in the morning and you go into a coffee shop and they are talking about start-ups and you see people that you know and then you drop off kids at school and you meet entrepreneurs or bankers who are drinking coffee…

Elliot Moss
It was a movie, Danny, I told you, you were in a movie.

Danny Rimer
There you go.

Elliot Moss
I can see it now, there’s Mr Rimer, he’s moving around. Hey, Danny!

Danny Rimer
No, no, it’s true for everyone in Silicon Valley. So, it actually, you know, being in a place like London where, you know, a lot of people don’t necessarily know or care about venture capital and tech start-ups, is actually very refreshing and helpful for what we are trying to accomplish.

Elliot Moss
And yet the flip of that, of course is that space you get as an outsider and I’ve lived abroad for a few years in India and Mexico, you see things with different eyes because it’s not your world which is very, very useful for perspective. The other thing I read about one of your favourite bits of advice was from Jim Barksdale who is the Founder of The Barksdale Group which is where were. He said ‘The main thing is to keep the main thing, the main thing’. So, the flip of that is I imagine that sense that you have to keep that entrepreneur focussed is critical. How do you do that?

Danny Rimer
Well I use that expression quite often with entrepreneurs so you are right to pick it out.

Elliot Moss
I’ve been stalking you, Danny, I’ve been stalking you.

Danny Rimer
No, no, no. So, he was the guy who ran FedEx and then ran Netscape and, yeah, he’s an amazing individual. But I think it’s a lot of my job is to make sure that we are lucky enough that the entrepreneurs that we work with are super talented and we are lucky enough that often times their businesses are going really well. And so sometimes they have to, we have to help them separate a great business from great execution. A good example of this is, obviously Google’s probably the best business that’s ever been created, it’s not like Google’s marketing has been epic, it’s been an afterthought and, I’m going to get into trouble for this but it’s been a result of a great service which is true for a lot of our companies, probably Apple is the exception, and so often times what it means is that the businesses are great and the execution can always be better and so a way of making sure that execution is as good as it should be is make sure that the entrepreneurs and their teams don’t get distracted but keep on doing a phenomenal job at the core service, the core thing that they promised to the customer.

Elliot Moss
Stay with me for our final chat with Danny Rimer and you’ll hear some more really good advice if you are thinking about doing your own thing or you are thinking about investing in someone else’s thing. We’ll also be playing a track from James Brown and that’s coming up in just a moment here on Jazz FM.

What would Jazz Shapers be without James Brown? That was James Brown with Every Day I Have The Blues. Danny Rimer is my Business Shaper and I am really pleased it’s him because it kind of brings a lot of things together that we’ve been covering on the programme, not least of which focus and being, as you said Danny, delivering on the core, don’t forget deliver on the core service advertising can be and lipstick on the pig doesn’t always do much good if the pig is indeed a pig. What are you driven by at this point in your career? Again, you strike me as a humble guy and it doesn’t look like the money drives you but the money’s there. You’ve made a lot of other people a lot of money, you’ve made… the business has made money. How does that therefore figure in your, as you look at what success constitutes, what does Danny Rimer say success constitutes? For you?

Danny Rimer
That’s a profound question. Well, success has many, I mean, has many parts. Obviously, the family part which probably is the most important and then from a business part it’s how to make sure that Index as a firm is the number one partner to the entrepreneurs in the future, that the folks who have this passion, this driving desire to upset industries and come up with much better solutions are going to call us first for being their partner and building those business and I think why that’s important is because the status quo is just not good enough. Really, all businesses have to be disrupted and have to come up with better solutions, for everyone, not just the customer but also for the employees and for the employers and making sure that we can come up with something that will last the test of time that’s not been a waste. That’s probably the most interesting part, I think. The entrepreneurs who usually come see us and work with us, have a bigger agenda than what they are doing and those agendas are really pretty significant, the guy from Patreon, I don’t know if you picked up on that, Patreon is an unbelievable company that’s trying to match creators with their fans and so, you know, you don’t have to be an incredibly successful top of the pops artist to actually have a great career in the arts and Patreon was started by this very successful artist who was in the band called Pomplamoose and he decided that instead of being a YouTube creator that had a successful career on the road and on his YouTube channel, he was going to build this business that was going to try and change the way that artists can pursue their passion and make their interest their career. This year alone he’s going to raise, or Patreon is going to raise over a half a billion dollars for these creators across the planet. So, the implications are not just for artists on a small scale, the implications are for everyone and for sort of taking that Medici, you know Renaissance concept and democratising it. So, those types of opportunities are really rewarding to be helpful in creating.

Elliot Moss
Well, genuinely transformational, I mean the world won’t be the same after that if goes to plan.

Danny Rimer
That’s right.

Elliot Moss
And that, just thinking of my last question before we ask you about your music. This space of time that Index Ventures has been in existence, twenty two years now, give or take. If you’d have set this business up in 1980 and technology wasn’t where it was, what would Index Ventures have been focussing on because it strikes me that this is an extraordinary time in the evolution and the history of people and of capitalism. I mean, it is fundamentally different to anything that we grew up with as kids. Would it even have existed or do you think it existed because of the change in impact of technology?

Danny Rimer
Yeah, it’s an interesting question. Venture capital really started in the late seventies in Silicon Valley with the creation of Hewlett Packard was probably the first venture backed company by this guy named Arthur Rock and so it was true in Silicon Valley and I guess Boston also had some for life sciences. You know, the question is, could there have been this type of industry in Europe in the 1980s and my sense is yes. You know, my sense is it was a different technology platform and maybe the folks would have been older and would have had careers, you know, you are in some ways potentially more successful if you drop out of University and start companies these days.

Elliot Moss
That’s where it all started going wrong for me, Danny.

Danny Rimer
I know. It seems pretty crazy but, no, stay in school folks, please. No, no, no.

Elliot Moss
Wear sunscreen.

Danny Rimer
Exactly. No, but I think obviously the folks then who were entrepreneurs were post-docs and, you know, semi-conductors and engineering and right now they are coming from all walks of life and are much younger. The cohort of entrepreneurs would have been different but I think the skill and the venture capital approach would have been true. Would probably have owned a lot more of the company for a lot less money.

Elliot Moss
Listen, good luck for the next twenty two years.

Danny Rimer
Thank you.

Elliot Moss
It’s been a real pleasure to talk to you and…

Danny Rimer
Thank you. It’s been a lot of fun.

Elliot Moss
…grab some proper insight as well and the people listening I am sure will be appreciative of that as well. Just before I let you go, what’s your song choice and why have you chosen it?

Danny Rimer
So, I chose The Falcon Flies Again by Brad Mehldau on his album called The Highway Rider and I think Brad Mehldau is pretty much close to genius as far as I can tell, you know as a jazz musician, I am a big fan of jazz hence I’m happy to be here. He knows all the core jazz riffs but also has these incredible creations and Highway Rider is an album that tells a story and Falcon Flies Again is one of my favourite tracks from the album but I would recommend folks to listen to the entire thing.

Elliot Moss
That was Brad Mehldau with The Falcon Will Fly Again, the song choice of my Business Shaper today, Danny Rimer. He talked about passion and the importance of it. He talked about the entrepreneur has to feel the status quo is not good enough and finally his build that he can bring in as the Index Ventures venture capitalist is that the execution can always be better regardless of just how good the idea or the business is. Really, really brilliant stuff. That’s it from Jazz Shapers, have a great weekend.

We hope you enjoyed that edition of Jazz Shapers. You will find hundreds more guests available for you to listen to in our archive. To find out more, just search Jazz Shapers and iTunes or your favourite podcast platform or head over to mishcon.com/jazzshapers.

Danny Rimer OBE is a Partner at Index Ventures, a global venture capital firm founded in Geneva in 1992. Danny joined Index in 2002 and established the firm’s London office. He later opened the San Francisco office with Mike Volpi. His current investments include 1stdibs, Discord, Farfetch, Figma, Glossier, GOAT, Good Eggs, Grailed, Humu, Patreon and Scoop. Prior to Index, Danny was a General Partner at The Barksdale Group, where he invested in over a dozen companies. Earlier in his career, he was at Hambrecht & Quist (now owned by JP Morgan), where he began the Internet sector equity research group. He was managing director and underwriting analyst and took Amazon, Netscape and Verisign public among others. Previously, Danny was a director of Betfair, Dropbox, Etsy, Sky, Last.fm, Lovefilm, MySQL, and Skype; and formerly on the Board of Trustees at SFMOMA and MAGGIE’S Centres. He was appointed an Officer of the Order of the British Empire (OBE) in the 2017 New Year Honours for services to business and charity.

Follow Danny on Twitter @dannyrimer.

“The realisation was that I wanted to help entrepreneurs and get closer to the source of the creation of companies.”

“I moved out of banking and it was in equity research I tried to work with operators who run and build companies.”

“Really, it’s trying to understand the entrepreneur, what’s driving them.”

“One has to have a lot of patience. Entrepreneurs are the ones driving and as much great advice as I might have, the reality is sometimes it won’t sink in, but they’re going to have to make the decisions.”

“I mean I certainly don’t feel like I’m fantastic at my craft, it’s something that is always humbling.”

“My favourite piece of advice: ‘The main thing is to keep the main thing, the main thing’.”

“A way of making sure the execution is as good as it should be is ensuring the entrepreneurs don’t get distracted but keep on doing a phenomenal job at the core service.”

“No, but it really it is one of these things where there isn’t a specific approach to take.  It depends on the individual.”

“Fundamentally you can’t build something of substance if your desire or your goal is to sell it; it’s just not going to happen.”