Sequoia is one One of the most sought after VC firms in the world, and predictably, it sees a lot of startups competing for their attention.
In a recent episode of Nerdshala Live (formerly Xtra Crunch Live), Sequoia partners Stephanie Zahn and Nick Fajt, founder and CEO of the social gaming platform Rec roomexplained what the venture capital firm looks for in a consumer-facing startup. We also took a look at Rec Room’s opening pitch deck, the seed that eventually grew into a business that raised nearly $150 million.
The episode also featured the ECL pitch-off, where the founders in the audience introduced their products and services to our expert guests to receive live feedback. You can watch the full episode as well as the rec room pitch deck below.
love is the answer
Sequoia, as with nearly every other VC firm, rewards one factor when deciding whether to invest in a consumer-facing company: user love.
From NPS scores to retention and engagement metrics to product reviews, there are a few ways to measure user love.
Just a few weeks after launch, RE Rooms was seeing users on average 26 minutes per session and about 90 minutes per day per user, meaning many users were coming back for multiple sessions.
Keep in mind that we are not talking about thousands of users. But in small numbers, the product was resonating, so it stood to reason that it would also resonate with more people. Sequoia was very attracted to it, and Xan said that in consumer companies, user love is the most important thing it looks for.
“It wasn’t just about people coming in, saying hello and exiting,” Xan said. “There was real engagement here, even in relatively small numbers. This was what was different. That was the real magic. “
Over time per session, Sequoia used Rec Room’s ‘high five’ metrics to evaluate user love.
High Five really has no value in rec room games. You neither win nor earn anything by giving a high five. But as more people played, the metrics continued to grow around the high fives.
Nick was thinking a lot about what forms of communication and interaction mattered. One of the things I forgot about, but I remembered rereading some of our internal communications at Sequoia from when we were evaluating the rec room at the time, was that we were in the High Five. Let’s talk about this notion. it’s interesting. I had a count of the high fives of the current user base at the time. And I thought why do high fives matter?