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30 Aug 2023

Heart and Hustle: A Conversation with Managing Partner Laela Sturdy

If you’re reading this blog post, you likely know that CapitalG is Alphabet’s independent growth fund, but you may not know what exactly that means. Unlike other venture firms that have many LPs–like foundations, endowments, and family offices–CapitalG has just one: Alphabet. While we make our investment decisions independently of Alphabet and Google, being part of Alphabet enables us to engage thousands of Google advisors to help our portfolio companies. More than 3000 Googlers have advised 4500 portfolio employees on everything from product and co-selling opportunities and fast-tracked Google ads support to mentorship programs and ML/AI training.

CapitalG is a unique firm, as our managing partner, Laela Sturdy, recently explained on The Logan Bartlett Show. In an expansive interview, Laela broke down CapitalG’s fund structure, investment decision-making process, the throughlines among top tech companies, and her own path from operator to managing partner. These were some of the highlights from that conversation.

How does CapitalG make investment decisions?

CapitalG’s investment team spends months and sometimes even years developing strong theses in sectors like cybersecurity, fintech, data, infrastructure, AI, and marketplaces. That sharp perspective frequently leads to large bets. “We'll typically invest anywhere from 75 to multiple hundreds of millions in each company and partner with them over the long haul,” says Laela. “It ends up being a reasonably concentrated portfolio because we want to be in the world's most consequential technology companies and to be able to partner with them deeply.” That means being able to spend the time and resources to accelerate their growth.

Is there a commonality among the companies you’ve invested in?

“First, it’s the founder, for sure. That is first and foremost,” says Laela, mentioning that all the companies she has backed are led by “amazing entrepreneurs who I deeply admire at companies where I felt like CapitalG and I could be great partners for them.” But Laela mentions another common thread among many companies that go up and to the right: customer engagement. You know a team is onto something when their offering is changing lives and shifting habits, she says. “When you look at companies like Stripe, UiPath or Whatnot, you see really high engagement data, and those are the ones that grow at disproportionately fast rates and get to profitability and hyper growth in an efficient way. Those are the companies that have outlier growth, where there's just an embedded potential in their existing customers to grow.”

After being an operator for many years, how did you become a great investor?

“One of the greatest gifts to me when I started at CapitalG 10 years ago was my partner Gene Frantz who joined CapitalG at about the same time. He worked at TPG for a long time and is a really amazing investor. He led CrowdStrike and Zscaler and so many of our incredible investments at CapitalG. We had totally different backgrounds, and we became very good friends and incredible partners to each other. The types of questions that I would ask an investment committee were very different from the types of questions that he would ask, and we were able to offer perspectives to our portfolio companies that were complementary,” she explains. She goes on to say that “investing is an apprenticeship business, so you need to learn as much as you can and put yourself in as many environments with steep learning curves as possible.”

How do you look at team building at CapitalG?

“I find it really rewarding to help recruit, mentor, and train the next generation of partners at the fund. We also bring on investors with a diversity of experiences. Having a diverse team inside the firm accelerates that learning curve so much more,” she says. “There's no better way to build a team than to bring as many relevant experiences as you can in the door, and build a collaborative culture where people help each other.” In addition, a diversity of experiences also brings more diverse people into venture, which is good for the ecosystem broadly.

What are your suggestions for people hoping to break into venture capital?

“The very best companies in the world have a lot of choices about who they bring on as an investing partner, so it takes effort to think about how you can truly be a relevant partner to them and how you can even get a conversation with them.” To be a good investor, “You have to be scrappier and more of a hustler than I think people realize. You have to find a way to get yourself into rooms that you weren’t invited to upfront.”

When Laela takes a meeting with a potential team member, she’s thinking: How did this person show up? Even if they’re asking for advice, how valuable did they make the conversation? What sort of insightful or creative things did they bring to the table? “You can tell who has some of that special sauce,” she said.

What’s your advice for tech professionals looking for their next chapter?

Laela recommends joining a hyper-growth startup that has already cracked the code on product-market fit. “Really fun and gnarly and challenging growth opportunities happen when things are growing like crazy and there’s not time to get the people that know what they’re doing in the door,” Laela says. “They have to give smart, eager, capable people the chance to try it themselves.”

Listen to the full interview on YouTube, Spotify, or Apple Podcasts.

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