This is episode 13 of the OpenVC Podcast. In this episode, Dan Nguyen-Huu, General Partner at Decibel VC, shares his journey from UBS and Battery Ventures to backing major investments like Databricks and Sumo Logic. He dives into venture capital, market shifts, AI, and his vision for Decibel's future.
Harrison Faull (04:56.61)
Hi Dan. Well, welcome to season one of the Open VC podcast. It's an absolute pleasure to have you here. How are you today?
Dan (05:24.702)
Good, good, thanks for having me.
Harrison Faull (05:27.076)
Awesome, You have been an operator turned investor. And I'd like to go all the way back to the very beginning of your entrepreneurial journey, which I think starts with your parents' influence. They moved from Vietnam to Germany. And then I think your father had a good paying corporate job and they took the leap of faith and became an entrepreneur himself. And some of that rubbed off on you because
You started building and selling computers to your classmates at a very young age. Did you have many entrepreneurial endeavors as a kid?
Dan (06:03.878)
Just that one. I love technology pretty early on. Obviously my dad worked for some of the large corporate companies back in the day like Compact Computers and HP. So eventually he started his own company and I've always admired that. know early on I messed around a lot with motherboards and things like that and even sold a few to, as you mentioned, to my classmates and made a little bit of money.
Dan (06:30.57)
It's always been an interesting passion of mine. And yeah, at some point I just had to decide that going to the heart of innovation, going to Silicon Valley was the right move for me. But yeah.
Harrison Faull (06:45.138)
Okay, so that takes me on to the next question, which is why you picked UC Berkeley as the place to go and do your college education.
Dan (06:53.136)
Yeah, I was really fortunate to get in to be honest. It's a great school and have a lot of respect for it and still look very fondly on my time there. Quite honestly, similar to most college experiences, I think you try to
find the group that you're really familiar with and a group that you're excited to get to know. And Berkeley is one of those places where it's a very, you know, very multicultural place. I'm a very multicultural person. I grew up in Germany and, you know, a child to immigrants. So there's always been conflicting, you know, cultural differences. And I think Berkeley is an all accepting place there. So when I went there, it felt like a second home.
Harrison Faull (07:43.732)
awesome. Do you any favorite memories of your time at Berkeley?
Dan (07:49.736)
there's so many. I think it's hard to really pick one.
Harrison Faull (08:01.428)
Was it more classes or peers? What would you think on balance was the...
Dan (08:07.242)
I think it's definitely both. There's obviously some really, really fantastic classes that you can take there, even outside the regular curriculum. I was a huge fan of economics back then and lot of classes like international trade and econometrics, but even beyond that, some of classes that are offered there that you can take are really, really fascinating. One of my favorite classes was actually wheelchair basketball.
I've never been a good basketball player, but I enjoyed learning how the rules were different when we played in a different type of setting. It was really, really fascinating and a really cool class to learn.
Harrison Faull (08:34.717)
Wow.
Harrison Faull (08:48.349)
Yeah, I think that time of your life really broadens your horizons. There's a huge peer student group. Everyone's got different ideas. Everyone's got loads of energy. think just being able to say yes and embrace a lot of new experiences is definitely the right approach to have. Okay, so you moved to America and then you stayed in America joining UBS for quite a few years working in finance before transitioning over to VMware, which was a cloud computing company. What?
Dan (08:58.964)
Yeah.
Absolutely.
Harrison Faull (09:17.32)
What encouraged you to make the move from great trajectory in finance into joining VMware?
Dan (09:20.862)
Yeah.
Dan (09:25.866)
Yeah, I started my career as a prototypical investment banking analyst coming out of college. Still to this day, I really actually look fondly on that time as well. It was a hard time. You work a lot of hours. You're in 110 hours a week and sleeping under desks and all that. But I think the group of analysts...
and friends that I made along the way there, we're still very close today. So we're still in like a fantasy league together and there's a lot of fun and thinking about the old times. I think investment banking is like a really great place to learn. You get to know a lot of different companies and I was in a technology group so I covered mostly software. And I really thought it was a great place to...
get your feet wet on understanding how software companies worked and technology companies operated. But at some point, you know, at the end of the day, when you're an investment banker, it can feel a little bit mercenary. A lot of times you try to get a company to be acquired or you try to like, you know, make a transaction happen. But then you don't really think about necessarily the consequences of it. You kind of move on to the next transaction. And I was really curious to learn.
you know, when you make a certain bet, when you make the bet to acquire another company, what happens after? And I was really curious about that. know, at the time I thought, you know, hey, cloud computing is a really, really interesting area. Infrastructure IT is a really, really interesting area.
decided to join VMware on the strategy and corporate development team where I basically helped lead M&A transactions and investments. And there you really learn the full life cycle of trying to do a deal. You acquire the company and then every year you do a check -in, like how's it going? Did we make the right call? Did we acquire the right company? Did we acquire the right team? And you could see the full life cycle of it playing out over time.
Dan (11:35.844)
And there I really, I think, got to learn the depths of infrastructure IT and cloud computing and cybersecurity and some of the more technical fields that I invest in today. So in a way, it really opened my eyes to the large scale markets that exist out there more so than maybe when I was in banking.
Harrison Faull (11:59.152)
Was there much of an uplift in terms of knowledge required moving from finance background into IT infrastructure and cyber security or had you always had some residual knowledge just like in that space already?
Dan (12:10.684)
Yeah, no, I'm, you know, was, even though I was very, very interested in computers early on, I would say that the world around those technical fields moves quickly. And I was really fortunate, you know, when I got to VMware, I spent a lot of time like talking to a lot of PMs, understanding the landscape and learning as much as I could because
It's a very complicated world and it changes every like 6 to 12 months. So I was fortunate to work there and meet a lot of really great people who took an interest in me learning and over the course of four years really feel like I got the hang of virtualized storage and hypervisors and things like that.
Harrison Faull (12:55.543)
So yeah, you have to keep up with a very fast paced environment, constantly learning. It's pretty cutthroat. You can't stand still. Are there any standout moments that you have of your time at VMware, either good or bad?
Dan (12:58.697)
Yeah.
Dan (13:10.567)
There's a lot of great moments at VMware. think you work on some pretty meaningful transactions. There was the spin -out of Pivotal, which is really, really meaningful because working through creating a separate company outside of VMware was really, really fascinating work. AirWatch was acquired at the time. Nasir had just been acquired when I got there.
which was obviously a large scale transaction. So the company was changing in a lot of ways. At the time, Pat Gelsinger was the CEO of the company and he had a really interesting vision around owning everything from virtualized computing to virtualized storage and virtualized networking. And all the pieces started to kind of fall into place. And that made a lot of sense to me. So it was a really, really fascinating time to kind of be there.
and learn to the company. Obviously, the company's gone through a lot of different changes in the last few years, getting acquired and everything else, but it's been a really, it was a really meaningful time for me.
Harrison Faull (14:18.408)
So you're building this very unique skill set where you're an expert of finance, you really understand the metrics of a business and what makes them tick, what's attractive to an acquirer. And you're also building probably quite a niche skill set, well it is quite niche, sub -security and IT infrastructure, although it has grown exponentially. And you find yourself stepping foot into the investing world again, but this time not in -house with a company, into an investment fund, but actually ventures, which is a huge VC.
Dan (14:30.932)
Thanks
Harrison Faull (14:47.115)
How did that come about and could you tell us bit more about what you did at Battery
Dan (14:51.238)
Yeah, I was brought on to the team and recruited out of VMware to help build out the infrastructure IT and cybersecurity practice on the West Coast for battery. I worked with a lot of really great colleagues there. yeah, I invested in a lot of really phenomenal companies during that time, including Databricks and Matillion and a few other, I would say like data infrastructure focused companies.
I also had seated a company in the cybersecurity space called Expel, which was a phenomenal experience for me because I got to see everything from the earliest stage all the way through. The company is doing quite well and is one of the most meaningful MDR vendors in the security space now.
and I have a lot of respect for what the founders went through to kind of make that all happen. It's definitely not an easy journey, but Battery was a place where I got the chance to learn to invest in every single stage.
you know, seed, series A, series B, series C, you name it. I've kind of done every letter in the alphabet there, which was awesome for somebody who's just starting out in venture capital. I was there for about five years and really enjoyed my time and got to see the full spectrum of investing. So overall, like a really meaningful experience for me and.
Harrison Faull (16:24.09)
think we need to give you a little bit more praise about your time at Battery because you landed some incredibly valuable ownership positions for them early, like within five years, just calling the shots and picking out some incredible investments. Looking back, what do you think gave you an unfair advantage as an investor in this space at that time that helped you pick so many winners?
Dan (16:51.038)
think the question that you're asking, which I think is a really insightful one, is about how do you create an edge in a market space that has a lot of options? And I think the reality is that...
Dan (17:10.846)
Let me start that question over, actually. me answer that question a little slightly different.
Harrison Faull (17:12.675)
Yeah, that was fun.
Dan (17:19.58)
Yeah, I think it's a really great question. you know, honestly, first, I have to say it's a team effort. That's probably the first thing I'll say. think, you know, investing well as a venture capital firm requires a lot of really, really bright minds. And I think the question that I get asked a lot by people is like, hey, like, you know, I want to be a venture capitalist. Like, how do I do it?
And the way I answer that question always is like, you should always think about why a founder would take your money. Why would a founder decide to work with you? And if you can answer that question well, then you have a true edge in the space. I did acquire a good amount of knowledge in the technical fields of infrastructure IT and cybersecurity over the course of my time at...
VMware and definitely leveraged that knowledge to build out thematic ideas on where I believe the world was going. know, believing that the world was going towards open source, believing that the world was moving towards cloud, believing that the world was going towards microservices, and that cybersecurity as a category was going to become more more important, especially.
as developers rose through the ranks as well in terms of importance. So I think all those things are tied together, but being thematically driven really, really helped me build conviction in a lot of different companies and that in turn, you know, aligned visions really easily with founders.
Harrison Faull (18:57.91)
No, that makes a lot of sense. Thank you. What do you think, looking back, when you were at VMware and you were becoming the sector specialist, was the intention to become a venture capital investor or was it curiosity that was really driving you to dive deeply into these areas? I'm thinking about it from the perspective of a fresh VC, maybe they're a sector agnostic fund. How did they end up specializing? What did they choose? How did they end up actually becoming?
Dan (19:22.793)
Mm.
Harrison Faull (19:27.502)
differentiated in a space.
Dan (19:29.226)
I believe that specialization is a good thing for a founder. I believe that because obviously I work at decibel and decibel is a specialist fund. We focus primarily on these technical fields. And I think it's because
Some of the fields are quite complicated and more importantly, I think what a founder needs especially at the earlier stage where we invest like in seed and series a It's it's clear to me that founders generally like what a what an infrastructure founder needs or a cybersecurity founder needs is quite different from maybe a consumer founder or Like a crypto founder. I think the needs are just kind of different, you know, the language they speak is different
So I feel that having specialization can be a meaningful edge because you can actually understand where the world is going and you also understand the history of what happened before them. So I think there is definitely an advantage there and I think it's important to develop it.
Harrison Faull (20:36.413)
Yeah, I completely agree. And the risks to you as an investor as well, when you start investing into deep tech or specialist founders, there are certain weaknesses that are perhaps more common than there might be with a consumer focused product. The first one coming to mind being sales, because typically a subject matter expert who likes reading research, who is very in the weeds of a problem that's in the industry.
Dan (20:42.634)
Yeah.
Harrison Faull (21:04.516)
isn't necessarily the best salesperson. And there might be some weaknesses in that founding team, especially at the seed and maybe not so much the series A stage. But how do you go about doing due diligence on founders in these spaces so early?
Dan (21:16.734)
Mm
Dan (21:20.946)
Yeah, that's a great question and maybe leads me to give you a little bit of context on how Decibel operates as a fund first. So we are an early stage specialist fund. We primarily focus on the technical domains of software. So that includes developer platform and tools, data infrastructure and AI and cybersecurity.
A lot of the time that we spend on trying to figure out what the next big themes are is because we also spend a lot of time talking to what we consider early adopters. Early adopters are essentially technical people in these domains that want to mold the clay with founders, want to see what the next iteration is, but also have in their own minds certain opinions on
the tooling that they would want or rather that they need. So a lot of the work that we do, especially with early stage founders, is to introduce them to these early adopters, to find them, to identify them. And quite honestly, they can sit in any organization. You might think, hey, an early adopter only sits in these cool startups and whatnot, but it's actually not true. I think there's early adopters everywhere in organizations like Starbucks and Home Depot. It doesn't matter. They can be there and they want to tinker with new
new stuff. That's maybe less so the people that might want to buy whatever is on the Gardner quadrant. So over time we have developed a huge community of early adopters, about like 2 ,000 of them.
And we leverage them quite a bit to understand, we have this thematic idea that we're thinking about. Is this something that resonates with you? If they agree that it resonates, a lot of times we'll try to find teams to work on that idea. certain founders have already started working on it. We'll put them in front of them and see how that works out. I think one of the...
Dan (23:24.84)
Key lessons of early stage is that product market fit is not really magic, it's math. That's kind of what we fundamentally believe, which means you iterate on the product on both sides. You you have a product, you show it to a customer, the customer might or might not like it, you keep iterating and you try to do this as much as you can and over time, hopefully we'll mold into something that the customer will like.
And so that's why most of these companies that might look like an overnight success require a lot of time and effort. And we believe that the only way to shorten that cycle is to meet as many of these early adopters as humanly possible so that you can get to the answer quicker. And that's really what we focus on at Decibel.
Harrison Faull (24:12.105)
Wow, okay, there's a lot of gems of gold. Well, there's a lot of gold in that answer there that I need to unpick. Firstly, I really want to dig into this early adopter community type situation. I've heard of VC funds doing customer due diligence where they might bring up a customer that the startup already has, say, hey, what stood out? Did you consider any competitors? What was the sales process like? I don't think I've ever heard of anyone actually...
Dan (24:17.178)
Dan (24:33.15)
Mm
Harrison Faull (24:40.2)
having an early adopter community. So how did you go about building that? what's the incentive? Like, why people part of it?
Dan (24:42.922)
Mm -hmm. Mm -hmm.
Dan (24:49.93)
The early adopters are definitely a special kind of breed and certainly one that we deeply appreciate because I think if it wasn't for them it'd be very hard to build new products in a structured way. I think we started out with like a really phenomenal group and tried to build out you know I think places for them to in a sense be.
So we started out in like cyber security, have in engineering and in other places, the real definition of somebody who's an early adopter is someone who loves molding the clay with founders, loves trying out new products, loves to talk about new products, and doesn't mind talking to a founder where the product's not perfect yet.
They, in a way, are oftentimes co -creating the future with the founders. And they are the first ones to evangelize the product over time. So if you build something that's phenomenal for the founder, a lot of times those early adopters are the first ones to buy it. But it doesn't have to be. It could be some that just want to see what's the latest.
I think people who are very intellectually curious about the future and wanting to have a hand in it, they generally opt into these type of communities. We spend a lot of time working with them and even talking about their biggest problems and the biggest challenges they face. And, you know, we try to find solutions for them. So I'm incredibly grateful to all of them because it would be very hard to validate some of the ideas that we have if it wasn't for them.
Harrison Faull (26:31.84)
an adult playground where instead of slides instead of monkey bars there are these new innovation new products that people can just play with and it's the version it's an adult playground so it's not in their professional capacity right they wouldn't be representing the company they work for this would be a personal capacity here I just have an outside interest I think that could be something interesting here okay
Dan (26:34.068)
Yeah.
Dan (26:39.775)
Yeah.
Dan (26:53.876)
think it's both. It can be both, Harrison. It can be both. mean, obviously sometimes they prefer to just say, this is like my free time and I like to tinker. But oftentimes it solves a real problem for them. They might want to, they have a real problem at their workplace and they can't really solve it with the existing solutions that exist out there. And they're curious to see what else could be built.
early adopters do get benefits, right? Like the benefit is if you're working closely with the founder early on, you might get a discount on like, you know, the first iteration of the product, right? So there's ways to make it worthwhile, you know, even beyond the emotional wanting to help someone. But I think it's generally really, really good for everybody.
Harrison Faull (27:25.952)
Yeah.
Harrison Faull (27:46.389)
No, that's awesome. Have there been any exceptions to the rule where actually the founder is such a visionary that the early adopters might not be agreeing with the vision of the founder? I'm imagining maybe like a Steve Jobs type character where people didn't necessarily know they wanted that smartphone. So are there also some downsides potentially to trying to get a group consensus in this type of strategy?
Dan (27:54.484)
Mm
Dan (28:01.534)
Yeah. Yeah.
Dan (28:09.96)
Yeah, I think that is like, and I think that's why it's important to talk to many of them, right? I think there's definitely been occasions when the product first was misunderstood. And, you know, maybe like a year later or two years later when the founder comes back to the same early adopters, like I completely missed what you were trying to do.
And now that I see it, I agree with it. it certainly happens. But I think it's always going to be a process of finding your original group of early adopters first. definitely not everybody will agree with everything that you're building. And that's OK. There's nothing wrong with it. But eventually, in B2B software in general, you have to find that first group that believes in you.
And it might not be everybody right away. You might not find resonance from everyone right away. And you stay the course as a founder, you stay the course as a partner to the founder because you believe in it and that's okay. There's nothing wrong with that.
Harrison Faull (29:13.587)
I think different to perhaps enterprise software, with these deep tech products you don't necessarily need market consensus. If a founder can get close to a large company, person at a senior company who's in a big position and tells them deeply about a problem that they have, if the founder can then build a very specific solution for that one customer, it's very likely that they will also be needed by similar companies in the future. So you don't necessarily need to demonstrate.
millions of dollars in ARR quickly, if you can demonstrate product expertise and value. Is that accurate? More so when it comes to deep tech products than it is consumer brands would probably be the other extreme in my head.
Dan (29:49.353)
Mm.
Dan (30:00.318)
I think almost every single product in B2B starts out with a small group of people who believes. I think that's always the case. I think over time, it's kind of hard to say, hey, you were right or we were wrong in the early stage because the product evolves so quickly. Every few months, you obviously have a different iteration of it. And the value increases and changes.
So I think it's hard to just say like, you were right or wrong about this. I think it's more about, hey, how does the founder kind of stay dynamic in his approach or her approach to build the next iteration of the product that will be appreciated by an early adopter? There isn't really a right or wrong early on, as early as we go.
Harrison Faull (30:50.431)
I this. So are there some like best practices or yeah, are there any best practices that you like to see and is demonstrating when they're iterating and building this product extremely early? Say they don't have access to the incredible early adopters, the decibels put together, but they're building a product themselves, they have one or two people that might be interested. What sort of things do you see differentiate
great founders from good founders or average founders at that stage.
Dan (31:22.614)
I think a really good practice is to be a good listener in the beginning. It's to get on the call with a potential customer and spend the time really doing some discovery work, spending the time to understand what the biggest, most pressing issues are, why they're here, why they're interested in talking to you, and kind of really having a lot of empathy.
for those customers to understand where they're coming from and what are the big challenges are for them. And then I think it's good to kind of walk through the story on why you're building what you're building. Sometimes when founders get on the phone with a customer early on, they're so excited about what they're doing, and they should be. It's their life's work and it's their passion, and they should be passionate about it. But you don't know necessarily what's going on in that person's life.
So I think showing a lot of understanding and wanting to listen and wanting to learn is one of the most key aspects of having a really positive interaction with something like that. Product wise, I think you should have a clear vision. Clarity of vision is very, important on why you're trying to solve the problem you're trying to solve. And then eventually also tying.
that product to some level of budget that you think you can acquire. So I think those three aspects, if you have a really clear path on those three and it doesn't have to happen right away out of the gate, can take some time. But I think eventually you want to get to those type of three best practices.
Harrison Faull (33:04.462)
That's amazing. It's very hard for founders to listen sometimes because they're so focused on what they are trying to get the other person to hear that they have blockers. So is there any like, do have to do any coaching at times to help people get better at these things?
Dan (33:24.266)
Yeah, absolutely. mean, you you definitely, know, a lot of times with us, you know, working with founders together, we spend a lot of time with them. And of course, coaching is that something we try to help with. I think it's natural for founders to have certain strong suits and certain weak spots. I think it's always great when founders have like the awareness to understand that. Quite honestly, you know, as an investor, you have weak spots and strong suits and...
okay. You need to just understand where they are so that you can compensate for them. So the best founders in my mind always have a really clear understanding of themselves and understand that they need to grow with the company. And over time, actually, as the company grows, they also have to level up. What you do at the early stage when you're building a product might be very different from what you do when you scale the company and build a huge good market engine and build a bigger company from there.
Harrison Faull (33:55.428)
Human.
Harrison Faull (34:25.157)
I really agree.
For founders considering raising money, I'd to flip the script and ask you a question that you said you'd ask yourself. Why should they pick Decibel
Dan (34:39.41)
Yeah, so, you know, there is certain domains that we just do not cover, like just in general. We don't do anything in consumer, we don't do crypto. I think those are really, really great areas if you want to build there, but that's not really, it's not really where we invest. We really spend most of our time with technical founders building technical products for technical audiences. And
we believe that in those domains we can help the family the most. And it comes in a variety of different ways. There's of course the early adopter community, which we have talked about at length. There is helping companies find part market fit at the earlier stage in a really structured way. And it's really in these domains where we believe thematically these are the areas and the white spaces that you can attack.
If you were to say, like, why does someone choose to work with us? It's because at the earliest stage, we're a really, really good partner in those technical domains.
Harrison Faull (35:42.61)
I love it. So let me give you an opportunity now. Do you have any good examples of when a startup has really effectively leveraged that early adopter community?
Dan (35:52.264)
Yeah, there's so many. All of them have in some way, shape or form benefited from it, whether it's to get really, really good early feedback, whether it's to actually convert customers directly and over time. And sometimes that actually happens over the course of a year or two. It can happen in six months. It can happen in three months. But it can also take literally years.
But yeah, there's a variety of different companies that have basically receded and that have done well. We have a few companies like RunZero, Census, Sublime Security in the email security space, when we invested. The company...
was really really early, didn't really have any customers at the time but had some really really promising technology and Josh and Ian are truly park visionaries and over the course of working with them over the last several years they have really shown the path towards park market fit.
have subsequently raised rounds from index and so on and so forth. So I feel like that kind of path is quite typical for a lot of the investments that we do. We have another company called Push Security in the ITDR space where we led the seed. then we're now partnered with GV.
there to kind of lead the series A. then there's a few examples like that. And we've been really fortunate to work with some really, really phenomenal partners.
Harrison Faull (37:26.951)
Thank
Harrison Faull (37:33.339)
You've mentioned before how quickly this space can change. mean, the rise of AI has got everyone on the back foot, believe. Well, most funds, most investors. What changes have you made to adapt for these new market conditions?
Dan (37:44.169)
Yeah.
Dan (37:51.658)
I think there's always, every so often, a really big market opportunity and AI is certainly one of those. The last big shift that we really saw that I thought was really meaningful was the move from on -prem to cloud. And then maybe the shift from, I would say, more static software development to like agile software development.
both were really meaningful, but it's possible that AI is maybe one of the largest ones we've ever seen. I think fundamentally that has shifted our approach of like, what can be accomplished with AI? And I think the early iteration of what people invested in was really around foundational models and like, you know, figuring out what the infrastructure might look like.
I think we have a much clearer sense now of what, you know, foundational models can do, what open source models can do, what Meta has accomplished with LaMao and a few other spots. But I think for startups, it's never been a better time because almost every single problem in the world can be tackled with a new technology. Now, I think you don't have to use generative AI or large language models for every single problem. That might be overkill.
But I think if you're a founder, the question you have to ask yourself is, what are the big markets that are disruptible right now? And I think there's many. so thematically, what we've been thinking about is really more in the context of AI agents and the verticalization of what likely will become the era, as we call it, services as software. So instead of software as a service, which is kind the traditional...
form of software delivery, know, software being delivered to us via the cloud. We think the next iteration of it will be service as software, which is essentially the service being delivered in the form of software. So it's just being done end to end. I think what enables that new process will likely be agents.
Dan (40:08.98)
So I think there's a lot of really big opportunities there and we've invested in a lot of really great companies that are pursuing those ideas, including a company called Brightwave.
which was founded by Mike Conover, who was at Databricks before. And he's building a financial research agent, so you can literally ask any type of question around, hey, where do we go from here in terms of financial markets, or some type of economic question. And it will give you a really detailed report about the current state of things. It's a really powerful tool that I think a lot of...
financial firms will likely acquire over time.
Harrison Faull (40:56.051)
How does it change the metrics for an investor when software as a service becomes service as software?
Dan (41:00.105)
Mm
Dan (41:05.396)
I mean, I think the metrics are maybe largely the same when it comes to the financials. I think what is really important to us early on is to figure out what truly the ROI is on any of these solutions. We have spent a lot of time building knowledge -based systems in these SaaS tools. Think of Salesforce and these systems of records that have basically consumed all the information that we as knowledge workers have put into them.
And I think like now we have to ask ourselves the question. Hey with this new advent of AI can we leverage a lot of the data that is out there to build very very intelligent systems that can deliver the service to us end -to -end so that we can spend time doing something else right and so if you can really quantify the ROI of like a Call an agentic solution then I think you have
you know, a really real big opportunity to kind of disrupt the market. We have a company that we had seeded and has recently raised a series A called Dropzone, which is a cybersecurity sock analyst, essentially. And one of the interesting things about cybersecurity is, you know, there's a shortage of people in the space. We get attacked quite a bit, nation states and hackers alike. And it's very hard to make sure that you investigate every single alert that you get.
It's just an overwhelming amount. And so whenever there's a labor shortage, I think there's an opportunity to build something that can hopefully help with that problem. And that's what Dropzone is doing. It's basically in...
an autonomous SOC analyst that can investigate all the tier one alerts and kind of can do it end to end, can go into like a Splunk like system or a log management system, pull out the logs, investigate the logs and then figure out like what the end result should be and provide that result and the report to a human who can then basically say, this makes sense. And, you know, here's kind of the next step.
Dan (43:03.434)
And so if you can imagine a world where maybe the adversaries, and this is more related to cybersecurity in particular, the adversaries in our world are likely going to utilize large language models to create a higher volume and a higher variety of attacks on us, then you can also imagine that on the other side we have to find a solution that compensates for that increase in attacks. And I think the only way to do that is to also build solutions that will...
hopefully help with that.
Harrison Faull (43:35.38)
sounds like an amazing investment. It's great application of technology in a space that very much needs it. Are there any standout performers in the fund that you guys like to put on a pedestal? Or if it's a bit too early for that, any particular startups in the portfolio that you're really excited by?
Dan (43:53.266)
there's many. We are excited about many of our companies and there's many great stories in that. I think one of them I mentioned already was Sublime Security and the email security space. We think super highly of Josh and Ian and what they have built.
There's a longer list of companies like Runzero which was founded by the original creator of Metasploit, HD Moore. He's truly a product visionary in the VM space and the vulnerability management space and in the chasm space. And of course there's a few other ones like SpectroOps, which is a identity risk company that's done really well. They started out actually as...
You know one of the best at the experts in adversarial attacks And it's a really really phenomenal company that has built an open source project called bloodhound And The open source project of bloodhound is essentially if you think about it like a Google Maps for hackers to really understand hey, if you're You know getting access into using somebody's identity into a corporate enterprise
where is the hacker likely going to go from there? Are you going to make a left on Kearney Street and make a right on, you know what mean? So like once you start seeing some of these patterns, you can then shut off all these different identity attack paths and you can like essentially block off roads or set traps and do other things to like basically mitigate the overall risk posture of your identities.
Harrison Faull (45:29.162)
definitely needs to happen because there are some innovative scams going on where people can now mimic your voice after just recording even just a YouTube video if they've heard 40 minutes I think it's even like three minutes if you just say the right words they can then make you say anything you want on the telephone even in a deep fake form and then they can access certain accounts that don't have enough security on them at the moment
Dan (45:50.28)
Yeah, so what you were saying is that recording this podcast is really increasing our identity risk.
Harrison Faull (45:54.282)
It's a vulnerability for sure. So whoever's finding that solution, they need to get in touch building the solution to this.
If there have been any tough moments as an investor? Have you had any moments where there have been disagreements with founders, we've had to pull term sheets? Could you give us an insight into the less glamorous side of investing?
Dan (46:21.482)
Yeah, there's always tough moments. I think when you're building companies on the earliest stage, there can always be situations when things don't go as well as you had hoped. I think that's natural. It's part of the job. I've worked with founders where they work themselves to the bone. And I think this is actually one of the things that I try to tell founders early on. It's like it's a marathon.
It's a marathon, not a sprint. So take care of yourself, take care of your family, make sure that you get a workout in. I know you're obsessed about building product and working hard and grinding it out, but I am really, really big on making sure that they're healthy. There's been moments where I worked with a founder and...
how things come up and when you're at the earlier stage, there is really nobody else to help you with this stuff, right? You're just on your own so early on. And it can get in the way of building a great company, but more importantly, think it's just, you wanna make sure that your founders are doing well. So I think it's important that you have some free time and that you have a balanced life while you're still working hard, but you have to make time for yourself.
And I think that's sometimes hard when somebody has like such clarity or vision. But you have to recognize that, you know, these journeys can be 10, 15 years long, maybe longer until, you know, it's the end when you get acquired or go public or whatever it is. It might go on from there, but I think like finding that balance is hard for a lot of people. know, so I think that's really, really important to do.
Harrison Faull (48:09.865)
given how glamourized being a founder is to the general market everyone thinks it's just going to be successful but actually the day to day in the trenches as a founder at the C to series A every day is a shit show. There's so many things going wrong, so many rejections, these successes are genuinely normally few and far between so to have the mental resilience to go from one to the other and not lose any
Dan (48:14.59)
Yeah.
Dan (48:21.098)
Mm -hmm.
Harrison Faull (48:34.991)
at the end goal is a tough thing to do and I imagine it does burn a few people along the way and looking after yourself is definitely something you can do to prolong your capacity for that of being in the war.
Dan (48:51.208)
Yeah, I agree with you. It is one of the most underrated things is to like, you know, make sure that you get a workout in and like, you know, try to eat healthy and like, you know, keep, keep, keep working on yourself as much as you're working on the company. And yeah, there's like a little bit of a glamorization around that, know, like grind, grind yourself to the core and you know, I think that's, you know, there is some truth to it, of course, like you have to work hard to create something out of nothing, you know.
But I also think that if it is a really long path and what you were trying to accomplish over the next 10 -15 years to build a really phenomenal enduring company, you have to also make sure that you're healthy enough to do it.
Harrison Faull (49:34.735)
Love it. Thank you. Okay, so more positive note now. Where do you want Decibel to be in five years time? Do you have any personal goals or overall goals for the fund?
Dan (49:46.226)
Yeah, yeah, certainly. I think we are a really early stage specialist fund and we've been around for a few years. It's going on five or six years now.
And it's been a really phenomenal journey. Some of the founders who have decided to work with us, even in the early days when we were not really quite known, even in the domains that we cover now, I will always be eternally grateful for. Obviously, John, myself, Alessio, Jess, we...
have been in venture capital for quite some time, so we had some reputations, but still at the same time, you know, when the founder takes a bet on you and you're taking a bet on them, you know, there's like a lot of mutual respect. So I think like long term, we're always going to try to focus on early stage. We're always going to focus on, you know, pre -seed, seed and A and helping founders try to accelerate the path to product market fit.
There'll be a lot of different capabilities that we'll add alongside the early adopter community and some of the talent work that we're doing through my partner, Lauren. But there'll be more capabilities to be added over the course of the next few years. What they are, I will release at a later date, but we're quite excited to try to, you know, whatever it is to make the founders life a little bit easier to get to product market fit. That's the most important thing to us. That's our North Star.
Harrison Faull (51:25.419)
I always find it more impressive when VC tells me that they're like getting down and dirty in the most uncertain times in the seed stage when it's not traction, it's not vanity, it's actually really tough to find the winners and make money. Comparing that to the old age of growth funds, you're kind of, it seems a bit simpler, where it's fairly metric driven versus having a thesis, building a brand, a network, having a
having a community of early adopters, things like that. It's a harder work and it's also a longer payback period. But yeah, I also prefer the seed stage.
Dan (52:05.812)
That's great.
Harrison Faull (52:07.355)
Harrison Faull (52:12.047)
You took a really good bet in your career when you moved into cybersecurity and cloud technology at the right time. Advising a junior VC now, are there any areas that you would pick for them to specialize in today?
Dan (52:23.508)
Mm
Dan (52:33.93)
I think you should just follow whatever you're truly passionate about. If you're going to be a specialist for the next like 10 to 15 years, you have to like the domains that you cover, whether that's consumer crypto or infrastructure or cybersecurity. You have to genuinely like the space. I like to invest in it, like to build in it. Otherwise it's going to be a tough life, I think. I've always been...
a big fan of trying to be thematic in your approach as an investor to try to really understand where the next opportunities come from and understand the history of where the market was before that. So I don't necessarily have any advice on like, this is the sector you specialize because it's gonna be hot in the next like 10 years. The truth is, I don't know, right? I think the world is changing quickly all the time and you have to be open minded to seeing what the opportunities are.
Harrison Faull (53:34.327)
I that's good advice. It's a long journey. You've got to enjoy the ride. Otherwise, it's going to be very difficult to get to that finish line. Look, thank you very much, Dan. This has been a great episode full of loads of insights. I really, really appreciate you coming on.
Dan (53:40.595)
Yeah.
Dan (53:49.202)
Awesome. Thank you for having me. Appreciate it, Harrison.
