Lessons from Investing in 700+ Startups | Goodwater Capital, Eric Kim

Summary

Eric Kim, co-founder of Goodwater Capital, shares insights into entrepreneurship and venture capital. He emphasizes the importance of mission-driven founders who prioritize their companies over personal fame or comfort. Kim discusses how Goodwater Capital’s focus on consumer technology aims to drive both financial returns and positive societal impact. The firm blends data-driven analysis with a deep understanding of the human side of entrepreneurship, ensuring they invest in companies with long-term potential. Kim also reflects on his personal journey, highlighting the values of hard work, humility, and a relentless drive to create generational impact.

Takeaways

• 😀 Exceptional entrepreneurs prioritize the company's mission above personal gains, demonstrating self-sacrifice and commitment to the company’s success.
• 😀 Fame, financial reward, and easy lifestyles are not the focus for true entrepreneurs; the drive is to build something impactful and lasting.
• 😀 Goodwater Capital's mission is to empower exceptional entrepreneurs worldwide and drive positive change through consumer technology.
• 😀 Eric Kim’s personal journey is deeply influenced by his parents' sacrifices and the racial challenges he faced, instilling a sense of urgency and the need to be 150% better.
• 😀 Humility is an important quality that Eric Kim is embracing in his later years, as he continues to reflect on his own experiences with bias and prejudice.
• 😀 A global perspective is critical for venture capitalists. Eric Kim's work at McKinsey and Maverick Capital provided him with deep international exposure, influencing his investment strategies.
• 😀 Goodwater Capital’s investment thesis focuses on consumer technology, particularly mobile platforms that foster strong customer relationships and network effects, as seen with companies like Kakao and Coupang.
• 😀 Successful venture capital investments often come from contrarian insights backed by primary research, as demonstrated by Goodwater's investments in Kakao and Coupang in their early stages.
• 😀 Goodwater Capital employs both science (data analytics and software) and art (entrepreneurial intuition) in their investment process, allowing for a deeper understanding of both companies and entrepreneurs.
• 😀 The firm values discipline and passion in venture capital, looking for individuals obsessed with finding great companies and willing to put in the hard work necessary to sustain long-term success.
• 😀 Venture capital is both an art and a science. Successful investors must have the discipline to follow frameworks and the flexibility to break the rules when necessary, innovating in the process.

Q & A

What is one of the key characteristics of exceptional entrepreneurs, according to Eric Kim?

Exceptional entrepreneurs often have a strong sense of self-sacrifice, putting the company and its mission first. They are committed to doing what's best for the company, sometimes at the expense of personal fame, wealth, or an easy lifestyle.

How did Eric Kim’s parents influence his approach to life and work?

Eric's parents, who were both doctors, emphasized the importance of hard work and education. His father specifically taught him that, as an Asian-American, he would need to work 150% harder to succeed because of systemic biases and racism.

How did Eric Kim's experience at McKinsey and Maverick Capital shape his approach to venture capital?

Eric's time at McKinsey and Maverick Capital gave him a global perspective on business and investing. His experiences in different markets and industries helped him develop a deep understanding of both early- and late-stage investments, as well as how to identify growth opportunities.

What is Goodwater Capital’s investment philosophy?

Goodwater Capital focuses on consumer technology, believing that it has the potential to change the world. The firm uses data science and technology to assess companies and is committed to empowering exceptional entrepreneurs to drive positive impact through their innovations.

Why does Goodwater Capital focus on consumer technology over other sectors?

Goodwater Capital believes that consumer technology is a powerful industry that can change the world. They argue that owning the relationship with the end consumer provides significant opportunities for innovation and growth, which can positively impact other industries like healthcare, education, and financial services.

How does Goodwater Capital combine data science and the human element in their investment process?

Goodwater Capital uses technology and data science to quickly evaluate a company’s growth, retention, and customer love. However, they also prioritize understanding the entrepreneur behind the company, assessing their motivations, vision, and ability to lead, allowing them to make more informed, human-centered investment decisions.

What does Eric Kim mean by the 'investor mindset'?

The 'investor mindset' involves having a big-picture vision, understanding the key components necessary for a company’s success, identifying the risks involved, and conducting thorough research to assess those risks. It also requires taking a leap of faith and having conviction in your decisions.

What is the significance of consumer love and customer retention in Goodwater Capital’s investment strategy?

Consumer love and customer retention are key indicators of a company's potential for long-term success. Goodwater Capital places a high value on understanding customer sentiment, as it often leads to strong network effects and sustainable growth, particularly in consumer tech companies.

Why does Eric Kim emphasize the importance of not seeking fame in venture capital?

Eric Kim believes that seeking fame in venture capital can distract from the true purpose of investing, which is to support and empower entrepreneurs. At Goodwater Capital, they focus on identifying and supporting companies with transformative potential, rather than pursuing personal fame or recognition.

How does Goodwater Capital's approach to venture capital differ from traditional firms?

Goodwater Capital differentiates itself by being mission-oriented and focusing exclusively on consumer technology. While many venture capital firms diversify their portfolios across various industries, Goodwater Capital believes that consumer tech offers the most significant long-term growth and impact opportunities.