About Designer Fund

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“What are you spending your nights and weekends on and is there a way for you to make that your job? Because that's the stuff that you're really into.” – Ben Blumenrose

Ben Blumenrose is Co-director and Managing Partner of Designer Fund, which is an early stage venture capital firm that backs founders that both recognize the power of design and are committed to getting design right from day one. Designer Fund was founded by Ben Blumenrose and Enrique Allen in 2012 after the two met at a program put on by Stanford's D school, where students use design to develop their own creative potential. When Ben and Enrique founded Designer Fund, there were few companies in Silicon Valley outside of Apple that understood the power of design to build incredible products, create a category defining brand, and ultimately forge an enduring company.

There were also no other venture capitalists with a pure design background. And yet, over the last decade Designer Fund has built an incredible venture firm. They've produced top quartile returns for their investors, beating out almost all of their peers in the market, and we're early investors in a wave of design-centric companies that have defined the last 10 years, including Stripe and Gusto. In today's episode, you'll learn why design is essential to creating great products that delight customers. Products that don't just check a box, but that set a new standard and aim to improve some aspect of their customer's lives. The role that design plays in developing, sharing and executing a shared vision. Including why designer founders are some of the world's best storytellers. How companies like Airbnb have made design a strategic focus and given design a seat at the table when it comes to making decisions at the highest levels. We talk about what separates the companies that get design right from those that get it wrong.

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Chapters

This episode is our definitive guide to building the world’s first design centric venture capital firm. In it we cover:

(00:00:00) – Introduction
(00:02:39) – The genesis of Designer Fund
(00:22:31) – Demystifying design
(00:28:28) – Traits of designer founders
(00:35:02) – Sweat the details that matter
(00:39:23) – The Designer Fund algorithm
(00:44:23 – Balancing skepticism and optimism in investing
(00:48:47) – Core qualities of great startups
(00:50:32) – How designers can add value as investors

Listen to the episode on Apple Podcasts, Spotify, Overcast, Google Podcasts, Amazon Music, Castbox, Pocket Casts, Player FM, Podcast Addict, iHeartRadio, or on your favorite podcast platform. You can watch the interview on YouTube here.

Our Favorite Quotes

Here are a few ideas we'll be thinking about weeks and months from now:

“Facebook's success created this giant magnifying glass on the people that worked there and people started reaching out for help on design. And it really opened my eyes to how absent design was in venture. These companies were getting started without designers anywhere in sight.”
“We need better designed products and services in the world. And when you actually zoom out at what's required to do that, there's a lot of things that need to happen. We need way more designers in the world. Two orders of magnitude, three orders of ... A lot more, right? Then we need those designers to be good at their job. We need qualified. We don't just need quantity, we need quality. So we need people who can do the work really well. Then we need ... Like you said, people are starting companies. They come from all sorts of backgrounds. Well, we need them to value design. And so they need to know that design is a superpower that can help your company win and do well. And without it, you're basically, you're hampered.”
“I think at the highest level design is the deliberate act of making something. And it's the deliberate act of making something with a purpose. There's supposed to be some utility when you're designing something. If it doesn't have utility, if it's for creative expression, that tends to be art.”
“ Everyone is a designer, whether they know it or not. So let's start with that.”
“In some cases, founders who value design that are not designers have actually done a better job of resourcing design than designer founders. Because I think they have the ability of saying I'm not a designer and I think it's really important.”
“The companies that do design well, they basically understand what are the important needs of the company right now and how can I apply design to those needs? And it's so basic, but you actually see a lot of people doing this wrong, which is the company needs to find product market fit and you have designers polishing a marketing site, for example, or polishing a product that they don't even know is the right thing to build.”
“For any designer listening, you should be spending a lot of time recruiting for your company. It's another thing that a lot of designers don't spend enough time recruiting other designers. That's a really impactful thing to do because once you get another designer in there early on, has a huge impact on the output of the team.”

5 Ways to Dive Deeper

Want to dive deeper? Here the best content we've curated on this subject:

The Ultimate Guide to the Founding Designer Role: This fantastic resource from First Round Review outlines how to set up, fill, and fulfill the designer roll for startups.(42 Min)
Startups, this is how design works: A quick primer on startup design for non-designer founders. (16 Min)
aidesign.tools: This site curates articles from around the world centered on AI and design. (10 Min)
What Is the Role of an AI Designer?: Written by the Director of Product Design at Facebook, this quick read points out a few ways AI designers can benefit businesses. (6 Min)
Will DALL-E the AI Artist Take My Job?: An interesting take on competing with an AI designer. (15 Min)

Selected Links

We covered a lot of ground in this interview. Here are links to the stories, articles, and ideas discussed:

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Transcript

Daniel Scrivner (00:06):

Hello, and welcome to another episode of our Outlier Investor Series, where we dig into the ideas, frameworks and strategies used by world renowned investors across public and private markets. I'm Daniel Scrivner and on the show today, I'm joined by Ben Blumenrose, co-director and managing partner of Designer Fund, which is an early stage venture capital firm that backs founders that both recognize the power of design and are committed to getting design right from day one. Designer Fund was founded by Ben Blumenrose and Enrique Allen in 2012 after the two met at a program put on by Stanford's D school where students use design to develop their own creative potential. When Ben and Enrique founded Designer Fund, there were few companies in Silicon Valley outside of Apple that understood the power of design to build incredible products, create a category defining brand, and ultimately forge an enduring company.

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Daniel Scrivner (00:56):

There were also no other venture capitalists with a pure design background. And yet, over the last decade Designer Fund has built an incredible venture firm. They've produced top quartile returns for their investors, beating out almost all of their peers in the market, and we're early investors in a wave of design-centric companies that have defined the last 10 years, including Stripe and Gusto. In today's episode, you'll learn why design is essential to creating great products that delight customers. Products that don't just check a box, but that set a new standard and aim to improve some aspect of their customer's lives. The role that design plays in developing, sharing and executing a shared vision. Including why designer founders are some of the world's best storytellers. How companies like Airbnb have made design a strategic focus and given design as seat at the table when it comes to making decisions at the highest levels. We talk about what separates the companies that get design right from those that get it wrong.

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Daniel Scrivner (01:49):

We break down Designer Fund's investment process and decode the algorithm they use to make investment decisions, including how Designer Fund has redesigned the way venture is done and created a rigid process to help them make the highest quality decisions. And that's just the tip of the iceberg. There's a ton more. You can find the show notes and text transcript for this episode at outlieracademy.com/131. That's outlieracademy.com/131. And you can learn more about Designer Fund at designerfund.com or by following Designer Fund on Twitter. With that, please enjoy my conversation with Ben Blumenrose of Designer Fund.

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Daniel Scrivner (02:28):

Ben Blumenrose, thank you so much for joining me on Outlier Academy, as part of our Outlier Investor Series. I'm thrilled to have you on.

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Ben Blumenrose (02:34):

Excited to be on.

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Daniel Scrivner (02:39):

We're going to focus today on Designer Fund, which is a venture fund built around really the idea of getting design in venture backed startups from day one. And you've been working on this for about 10 years. Where I'd love to start, we've got a lot of ground to cover, is if you could just give people a quick sketch of your background in leading up to and before founding Designer Fund.

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Ben Blumenrose (03:00):

Sure. Yeah. So yeah. Oh man. Where to start?

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Daniel Scrivner (03:07):

You've got to go back in time. Crank up the time machine.

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Ben Blumenrose (03:08):

Yeah. I'm trying to think how far back to go. So yeah, my background is historically in fine arts. I'm 43 so computers when I was a kid, it was the Apple IIc. So the idea of design wasn't even the thing that we thought about. So I was just the kid that always drew and painted in the back of the class and just spent all my time doing that. And then all of a sudden the Apple II, the Mac came out and I got obsessed with that. I got obsessed with the idea of art on computers. The moment where design all of a sudden became the thing is on the Mac I used to modify software all the time. And as a 13 year old, I'd go in ResEdit and start modifying the way the software looked and I thought that was the coolest thing.

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Ben Blumenrose (04:00):

And then I used to be on BBS's and talking to folks. As a 13 year old, there was an ad agency that reached out to me. They had no idea how old I was. They just saw that I was modding these games. And they said, "Hey, we have this client. They want to modify this game to ..." The client was Zima. If you remember that clear alcoholic beverage.

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Daniel Scrivner (04:23):

Mm-hmm.

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Ben Blumenrose (04:23):

So yeah, they're reaching out to a 13 year old asking them to modify a game to be Zima centric. It Asteroids and they wanted it to have a six pack as the big asteroid, a single bottle as the-

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Daniel Scrivner (04:32):

Dear God.

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Ben Blumenrose (04:34):

And a bottle cap. And all done in 3D. I used to do a lot of 3D experiments. And they said, "We don't have much of a budget. We have five grand. We can pay you five grand." As a 13 year old in whatever it was, 1990, that was basically retirement money.

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Daniel Scrivner (04:54):

Yeah. That's $50,000 in today's dollars.

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Ben Blumenrose (04:56):

Yeah. With inflation today, it's 1.8 million. So someone's paying me 1.8 million to do these graphics. And that was the moment for me where I was like, "Oh my God, this is a thing I can make money on. Computer arts is a thing I can make money on." And I got obsessed with it. Went to study design at UCLA. I've had every kind of design role you can imagine. I've freelanced as a designer, I've worked in house at design agencies. I've done it all really. So when I talk to designers, it's like whatever stage of their career, I'm like, "I have been there. I have done what you're doing so I can speak to it."

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Ben Blumenrose (05:30):

But really the experience that opened my eyes to the power of design and scale is Facebook. In the summer of 2006, I get a call from a ... And I was starting my own company at the time with a friend that actually became a very big company called Magento Commerce. So I was starting that with a friend of mine. And I got a call from a friend of a friend. They worked in Palo Alto. Would I come up and meet the team? And they were a social network. And all I knew about the social network was that we had two interns and every time I would turn my head, they would be on this site. I'm just like, "Hey, stop going on that site. Do your work." And I was just so intrigued. I was so curious. What is the deal with this company?

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Ben Blumenrose (06:13):

So I went to visit Facebook when it was ... When I first visited it must have been about 100 people. Maybe three, four designers and whatever, 20, 25 engineers. And when I went up there, I said to myself, there is a ... And I told them this. I said, "There is a .0001% chance of me joining. It's so abysmally low." Because I lived in LA at the time and I just said, "There's no way I'm joining your company. It's so low. But I'm just curious to meet you all. I know people use this thing." They said, "Oh yeah. We'll take that." And so they flew me up.

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Ben Blumenrose (06:48):

It was a weekend where I didn't even realize it was an interview and flew back down to LA after that weekend and I just said, "Oh, okay. This is where everyone who's really good ... Amazing engineers, people who want to change the world, this is what Silicon Valley ..." I didn't really know anything about Silicon Valley. Any of that stuff. So that was the thing that opened my eyes to all of a sudden, this idea of product design, design at scale, design changing the world. All the stuff that I had dreamed of, all of a sudden it was actually getting manifested here.

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Ben Blumenrose (07:22):

And so that was the experience that really just changed my life trajectory. I got to meet amazing people and work alongside all these amazing people. And basically we started Designer Fund. And my plan was to stay there 15, 20 years. I was like ... I remember in 2010, I sat there and I looked around the office with ... The company was doing well. The people were amazing. And I remember there was a day, I just sat there and I looked around and I said, "This is it. I won't ever look for work again. As long as I keep doing what I'm doing, I'm done." And it was such a crazy feeling to feel like I'm done with this rat race of finding jobs. I no longer need to look for new jobs because I found the last job I will ever want. It was the most content I've felt. I have not felt that content with work since then. At Designer Fund it's so hard to feel content.

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Daniel Scrivner (08:16):

You had a peak moment a decade or more ago at this point.

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Ben Blumenrose (08:19):

I peaked. Yeah. In terms of just feeling like this is it and there's nothing more I need, that was it. And then basically a couple years later is when the cracks started to show up, which is just so many people started reaching ... Facebook's success created this giant magnifying glass on the people that worked there and people started reaching out for help on design. And it really opened my eyes to how absent design was in venture. These companies were getting started without designers anywhere in sight. And oh my God, this is a big problem because these are all the healthcare companies that are building the software in the hospital. It's all the stuff that we use, designers are absent. So there's a whole city getting built and architects are nowhere to be found. And I just thought, am I going to be okay? And that was 2011, 2012 and I just thought to myself in 2022 ... Which we're now here. I literally thought, "In 10 years, if I look back on this moment, will I feel good about staying at Facebook for another 10 years knowing that this is what's happening outside these walls?"

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Ben Blumenrose (09:19):

And I just sat with that for a few weeks and I said, "No. I'm not going to feel good about this. And I need to do something about this broader ecosystem. I need to start thinking about what's happening outside the castle, if you will." I thought it would be a side project. I didn't think I would actually do it full-time. But then all of a sudden nights and weekends started being filled up with this thing. That's one of the pieces of advice I always tell young designers is ... Or actually people anywhere. What are you spending your nights and weekends on and is there a way for you to make that your job? Because that's the stuff that you're really into. If you're spending your nights and Saturday and Sundays on something. And so is there a way for that your job?

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Ben Blumenrose (10:03):

And so at Facebook, I had never had anything that wasn't Facebook be my nights and weekends thing and around 2011 is when all of a sudden nights and weekends were Designer Fund time. And I thought to myself, what does this mean? Why am I not thinking about the next version of Facebook photo or the next version of Facebook profile or what we could do? Why? Why wasn't I thinking about this? And I just realized, because if we didn't do this thing, if we didn't do Designer Fund, it didn't feel like there was anyone else that would do it. It felt like that kind of thing. So that was why I left the sweet, lovely cushiony job there.

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Daniel Scrivner (10:44):

The blue walls. Or no, no, these are the spray painted walls. The spray painted muraled walls.

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Ben Blumenrose (10:48):

By the way, I remember when Enrique and were starting Designer Fund and one of our friends was letting us squat in the back of their office for free surrounded by their storage containers. There's paper towel storage and toilet paper and cereal and whatever. And that's where I watched the Facebook IPO on streaming. So you're looking around and you're like, "Okay, what have I done?" I'm seeing my friends and confetti's raining down on them and bells are ringing and they're cheering and the whole thing. And it's on every news show. And you're in the back of this startup surrounded by their boxes of Cap'n Crunch and Charmin Ultra Toilet Paper and you're like, this might have been a mistake.

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Daniel Scrivner (11:41):

Yeah. You went back and started a new story and you started at ground level. You pulled it from there.

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Ben Blumenrose (11:45):

Yeah. No one cares about what you're doing. That's all I kept telling myself. What you're doing right now, no one cares about.

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Daniel Scrivner (11:52):

Literally, nobody cares.

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Ben Blumenrose (11:54):

You and this other guy and that's it. Yeah. There's maybe four other people. Yeah.

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Daniel Scrivner (11:58):

I want to ask a couple of follow up questions and I'm going to hit fast forward in a second and talk about after the fund was started and what fundraising was like. But I want to start first by talking about what you hoped to accomplish with Designer Fund. You hit on it there. You hit on an aspect of it. And I know there's a lot more to it. But you hit on an aspect of it a moment ago around making sure that design was there at day one when engineers and founders are starting companies. One of the things I've observed is people that start companies come from every conceivable background. And yet at the end of the day, they need to ship a product that takes all these different disciplines of which they might be good at one ... Maybe one. Anyways. So talk a little bit about some of the ambitions that you had for Designer Fund and how those have played out over the last decade.

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Ben Blumenrose (12:45):

Yeah. At the highest level it's ... And it hasn't really changed all that much, but basically the way we started is we need better designed products and services in the world. You walk along your day and you go to an ATM, you go order stuff online, you go travel somewhere. All these things that we do as people. We read news. Whatever it is that we do. These are all experiences that are designed and a lot of them are poorly designed. And it's getting more and more frustrating and it's getting harder and harder out there. I think maybe as humans, we're just doing more things. Used to be just go to school, come back from school, eat dinner, take a walk. And now we're just doing a lot more things as humans. There's a lot more things to do. And I think we use a lot more products and services. And those things are all designed and usually poorly.

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Ben Blumenrose (13:44):

And so what we notice is we need to fix that. We need better designed products and services in the world. And when you actually zoom out at what's required to do that, there's a lot of things that need to happen. We need way more designers in the world. Two orders of magnitude, three orders of ... A lot more, right? Then we need those designers to be good at their job. We need qualified. We don't just need quantity, we need quality. So we need people who can do the work really well. Then we need ... Like you said, people are starting companies. They come from all sorts of backgrounds. Well, we need them to value design. And so they need to know that design is a superpower that can help your company win and do well. And without it, you're basically, you're hampered.

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Ben Blumenrose (14:33):

And so we need to be telling these stories of design creating successes. And if we don't do that, people are not going to value it and they're not going to bring it into their company. And then we need to make sure that the people who value it are also the companies that are going to do well. And it's not always the case that ... Because design is one piece. You also need funding. You need good sales. You need good distribution. All the things that we know that make for a good company. So when we looked at all those things, it's almost overwhelming when you first start with the mission as what we started with. It was just like, how do we get better designed products and services in the world? Then we realized the venture ecosystem is responsible for so much of creating the next generation of companies. And designers, what we saw at the time was they were coming into these big companies and trying to push design.

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Ben Blumenrose (15:30):

And I remember there was a conference where it was ... Brian Chesky was up on stage and there was the VP of design at ... I think it was AT&T. And the interviewer said, "How do you get design a seat at the table at your company?" And he's like, "We'll start with you." And the VP of design at AT&T had these four pillars and how he communicated these four pillars and marketing within ... And it was a 15 minute answer of how he pushed design to have a seat at the table at AT&T. And then he's like, "Brian, what about you? How do you get designed a seat at the table at Airbnb?" And Brian goes, "Well, because it's my fucking table, that's how."

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Daniel Scrivner (16:13):

That's a great answer. Great answer.

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Ben Blumenrose (16:17):

And I was like, oh my gosh. That's right. Right? At Airbnb of course design has a seat at the table. It's the CEO's table. And you see it in everything. And that moment, it further cemented for me if you bring design in on the ground floor ... It doesn't have to be a designer CEO, but it just has to be ... Ask anyone who's been at Stripe for a long time. They understand the value of design because design is permeating. John and Patrick are not designers by background, but they value it. One of the first hires they had was a designer. They made sure design was given time and space and resources to thrive at Stripe. And now you have all these people that worked at Stripe who when they're starting companies ... Look at the stuff that Stripe employees have started since leaving Stripe and all those products are beautifully designed. Why? Because they saw it firsthand that great design creates success.

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Ben Blumenrose (17:13):

And so for us, we need 1000X that. We felt like if you were going to look out 15, 20 years, the way to do that is not to try to send hundreds of designers to Ford and these huge companies and try to bake it in after the fact. It's, who's going to build the next set of Fortune 500 companies and how do we make sure that design is there on the ground floor? So it's like, okay, well who's making the next generation? It's VCs. How many VCs value design? One, three, five. I don't know. Whatever it was in 2012, you could probably count it on one hand. And we just said, "Okay, well that's where we go. That's where we're needed. We need to insert ourselves into that and change the ecosystem that way."

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Ben Blumenrose (18:02):

How has it gone? Well, I would say some things have gone really well in that we do see companies that value design really succeed. We do see more investors value design. We do see design taken more seriously. Even just something as simple as when I started a designer made, I don't know, 70% of what engineers made. If you're a graphic designer, a print ... If you were a marketing designer, you made half of what an engineer made. Maybe even less. I think it wasn't uncommon for a graphic designer to make 60K, 70K and an engineer make 200K or whatever it was. And now designers and engineers often are paid the same. And so that's gone really well.

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Ben Blumenrose (18:46):

Now, I also expected by year 10, if you were to tell me what does success look like for you, it's oh, every company we talk to has a designer founder at this point, right?

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Daniel Scrivner (18:58):

No.

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Ben Blumenrose (19:00):

I mean Designer Fund. So Designer Fund is like, if you're going to Designer Fund you have designer founder. And there should be hundreds or thousands of theses kinds of companies with designers on the founding team. That hasn't happened. And I think a big part of that is simply, we just don't output enough designers still. There just simply aren't the design schools. And the demand has grown. But I remember a few years ago I was looking at how many students ... Someone at Facebook told me, "Hey, did you know Facebook's trying to hire about 500 designers right now?" And I started doing them math. I'm like, wait a second. Take the top 10 design schools. If literally every graduating senior from the top 10 design schools was going to go to Facebook, that's still not 500 designers.

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Ben Blumenrose (19:46):

And hey, you know how many Google is trying to hire? Another 500. You know how many IBM's trying hire? 1200. And then you're like, well, that doesn't work. There's not enough of us. It just doesn't work. And so there's simply not enough designers to have made the math work. To have enough designers be co-founders and all that stuff. And then the second thing I think is I was hoping to see more designer investors. It's like, hey, if Designer Fund's successful, other designers should be like, "We can do that." And there've been a few. You're one, right? And there've been a few others. But I'm like, why aren't there 500 designer investors? And I think the more I'm into it, the more I get into being a VC, the more I realize that they're very different. Being a designer and being an investor is very different. And it isn't as different for engineers. The overlap of what it takes to be a good engineer and a good VC is probably ... There's a lot more overlap. And then the overlap of what it takes to be good at business and a good VC is almost-

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Daniel Scrivner (20:54):

100%.

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Ben Blumenrose (20:55):

It's just a circle. It's just one circle. Yeah. In terms of the love of the work. So for me, I get it why it's like, "Hey designer, do you want to look at spreadsheets all day instead of hang out in Figma making cool shit?" "No." "Right. Of course not. Why would you? That makes sense. It makes a lot of sense that you don't want to do that." So I'm just much more realistic now that it's going to much harder to get designers to be investors. But I do think we can get more investors to really understand the power of design. And I think we can do a lot more to support the designer angel ecosystem, which is that's where I'm starting to realize that's where we can get the 100,000X. Because designers are actually eager and excited to be angels because it's less of a commitment financially. It's less of a commitment time wise and it lets them spend most of their time still being a designer while scratching the itch of being a consultant and having more breadth of work.

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Ben Blumenrose (21:58):

So I think that's a place where every one of us can be ... That's where we can create some real change. So I would say in terms of where are we 10 years after we started, I think there's a lot of things that have worked well. Designer Fund is successful. Our funds are doing well. We do see more design. But there are definitely that not played out the way I ... If you had given me a magic wand in 2012, I would have wanted a designer partner at every firm and that's not even close.

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Daniel Scrivner (22:31):

No. Not even close. I'd love to stop for a second and demystify design. And what I want to do here for a second is ... One of the thoughts I've often had, which I don't love, but I think there's a lot of truth in it, is that design for a lot of people is a dark art. And what I mean by that is they don't really know what it is or what it means. And what I mean by that, just to give you a couple examples ... And I know you and I have both had experiences doing this. I know from experience design is incredibly powerful at crafting a company's brand. And why is that the case? Because inevitably, a company has a point of view, they have a future they're trying to create, they have values. Need to figure out how to express that. And it turns out expressing that visually is ... And it's not just visually. It's visually and then copy. Bringing it all together is really, really, really hard. That's one aspect. Then there's marketing. Then there's product design. Then there's all of these different pieces. So I guess just the question I would ask is, do you ever break apart what design is and how do you maybe demystify it for founders or people that are like, what is design with a capital D and what are all the different places you can apply it to?

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Ben Blumenrose (23:35):

Yeah. Look, we have a much broader ... And by the way, when we were fundraising for our first fund, there were definitely people who 10 minutes into the pitch, they'd sit back and they'd go, "Can I just stop for a second? What is design?"

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Daniel Scrivner (23:53):

This is for those people.

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Ben Blumenrose (23:54):

And we're like, "What do you mean?"

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Daniel Scrivner (23:54):

There's a lot of them.

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Ben Blumenrose (23:57):

They're like, "Is it interior design?" I'm like uh-oh. So I would know in those pitches, oh well, we need to back way, way, way up. The way we think about design at Designer Fund is pretty broad. So there are the different types. You have marketing design. You have UI/UX design. You have product design, which is strategic. So those are usually the types of ... And you have graphic design, which can be marketing design, but doesn't have to be. There's different ways to apply graphic design. And so I think at the highest level design is the deliberate act of making something. And it's the deliberate act of making something with a purpose. There's supposed to be some utility when you're designing something.

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Ben Blumenrose (24:57):

If it doesn't have utility, if it's for creative expression, that tends to be art. So that's at the highest level what design is. When it comes to startups, the way it gets manifested is marketing design, product design, UI/UX design, which is the design of the components of the software that we use. And then how it gets manifested at companies ... I think the challenge for a lot of designers is to make people understand ... Sorry. And then there's also experience design, which is both offline and online. So I think the thing that is a challenge for designers at tech companies and companies in general, is to help people understand that everything that we do, everything that we experience is designed. And whether you realize it or not, we're always creating things that people are experiencing. And most people don't think about it as design. They just think of it as doing work or whatever. Making things. But it's all design.

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Ben Blumenrose (26:04):

So I like to have design to be a much broader tent, as opposed to this thing that it's like, hey, you can't design things because you're not a designer. It's like, everyone is a designer. Everyone is a designer whether they know it or not. So let's start with that. So now that you're designing things all the time, all of us are, well, then the question becomes, are you doing it well or not? So it's not should this thing be designed? Do we need designers? It's how well do we want the thing designed? Do we want it done poorly? So let me give you another example. When I spoke to sales at Facebook early on, there was one guy in sales and I said, "Hey, what would you do with design resources?" And he goes, "Well, let me show you what I'm going to go pitch Microsoft with." And he pulls up PowerPoint. And we were a small company at the time and the idea was, hey, let's show Microsoft what it would look like to integrate Microsoft products into Facebook as done by a salesperson using PowerPoint.

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Daniel Scrivner (27:05):

Which makes me frightened at what that would've looked like.

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Ben Blumenrose (27:08):

Whatever you're envisioning is not as good as what it was. To his credit, do the best that you can with the tools available. But the insight, he's like, "Look, you're a product designer. You're designing the very product that these things could be ... What would Microsoft maps look like within Facebook? What would Microsoft ads look like within Facebook? You could actually make this look real." And so I was like, "All right, let's do it. I'll do it. Let's work together." And all of a sudden the sales deck became one of this ... It's one of storytelling and squinting your eyes to one where they could actually ... It's like, this is it. This is what the final deliverable could be. And this is what millions of people would see. Exactly like this. And that's super powerful. And so for me, using design ... So I think that's where I try to tell people is we're always designing things and the question is, are you designing it well or not? And if it's not being designed well, then you need to be thinking about how do I bring in great design into all the things that our company's doing so that they can have the impact that we want?

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Daniel Scrivner (28:28):

I'd love to talk for a second about designer founders. And I know at Designer Fund it's not like every founder that comes to you or every founder you write a check in needs to have a design background. But clearly they're coming to you. They care about design. They want to get design right. But I want to zoom in for a second on the people that come to you and do have a design background and are a designer founder. And I guess the question I want to ask there is you talked before about this Venn diagram. It was more design versus VC. But it strikes me that design and founder Venn diagram is probably pretty decoupled as well too. And so one of the questions I wanted ask is ... If anyone listening thinks about, well, what advantages would a founder have if they have a design background? They can come up with probably some pretty compelling answers. What I think is interesting as well too, is what do they struggle with? So can you talk for a second about when you end up investing in a designer founder, what do they typically get and what do they typically struggle with and you have to help them?

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Ben Blumenrose (29:26):

I don't know that there's a typical ... I can stereotype a little bit, but I would say that from what I've seen, designer founders are as broad of a set of people as founders. And what I mean by that is you have the designer founders that are super into craft. You have the designer founders that are actually really into business building and want to use design as a superpower in building a business. And they actually see business building as a design endeavor. You have designer founders who basically are like, "I'm done with design and I just want to build a company." There's even a more extreme, which is someone who just thinks design is shit. I was a designer. I spent all my time massaging rounded corners and that's crap. And I'm over that. They've rebelled against it in some ways.

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Ben Blumenrose (30:23):

So I would say there's a huge swath of people even within the designer founder ecosystem. So when we got started at Designer Fund, our thinking was how do we invest in companies that value design? And the easiest way to do that is by using the filter, do they have a designer on the founding team? And it was a pretty good filter. But what I would say is that there were a lot of founders that came to us in those early days. And the Stripe founders are in that bucket. Where they said, "Look, okay, I'm not a designer founder, but just look at my actions. Look at where I've put resources into it. Look at what I've brought resources into." And it's very clear that they value design. And in some cases, founders who value design that are not designers have actually done a better job of resourcing design than designer founders. Because I think they have the ability of saying I'm not a designer and I think it's really important. And so it almost comes off as more ... It's less self-serving if you will.

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Ben Blumenrose (31:29):

If I'm an engineer that super values design and I'm the CEO of the company, everyone's like, "Wow. Okay well, if that person thinks design is valuable ... It's not like they're just playing to their own thing. It must be important." And so over time we've come to the conclusion that it's more about investing in founders that value design. And they can be designers, but they don't necessarily have to be. And in terms of what are the mistakes? If I had to generalize the things that they're strong at and the things that they're weak at, designer founders are amazing at manifesting the future because they can basically create something that looks built and real. They can build this brand. They can build a marketing side. They can build a product before it's shipped. They can basically, instead of telling you with words, they build the thing. You just say, "Wow. I can see what you mean when you're pitching me on something, because it looks like it's built."

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Ben Blumenrose (32:28):

So that's a huge superpower. They're amazing at storytelling. So brand building, product building, storytelling, those are all strengths. I would say where a lot of designer founders can be weak is ... There's dozens of things you need to be good at as a founder. Sales, fundraising, which is related to sales, hiring and recruiting, setting financial projections, all those things. So I think what we talk to designer founders about ... And actually we tell almost every founder this, is what are the things that you're good at that you're going to lean into? What are the things that you're not good at, but you want to get good at? And let's figure those out.

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Ben Blumenrose (33:13):

And what are the things that you're not good at that you don't want to be good at that we need to outsource or get someone in here who's going to take those off your plate? And so we definitely look a lot at the composition of the founding team and making sure that the key pieces are somehow covered by the founding team and potentially also by the investing team. And so for designer founders, it often means that they have someone who's a domain expert or someone who's an engineer or someone who's really good at operations. It tends to be that designers don't love those kind of things. Designers tend to focus on brand, product. I'll just say brand and product tend to be the things that designers focus on most.

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Daniel Scrivner (33:54):

I want to ask a springboard question and it's related to that. And one of the questions I wanted to ask ... I can't remember how many companies you've invested in now, but it's quite a few.

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Ben Blumenrose (34:02):

Over 50.

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Daniel Scrivner (34:03):

It's in the tens for sure. Over 50. That is a lot of data points. And one of the things I've observed is that getting design right in a company is actually very challenging because one, there's just the super high level, you say you care about design, but when push comes to shove and you're in a budget conversation that's a heated discussion around where resources are going to go, you can't pull the trigger on allocating towards design. That's maybe the easy one. But then there's a lot of stuff I've seen where somebody actually wants to be good at design, but there's a lot of soft stuff that's necessary for design to function well in your company. And one example there ... I'll just give an example is, one of the things I noticed and I've observed broadly is leaving time for exploration before you get into just execution. We talked about this before. But talking with someone around, "Hey, I'd like this to be done in four weeks." In that sure, maybe you can get that done if it's a straight shot, but oftentimes with design, you're trying to get to an ideal outcome and that actually takes a lot of exploration. And what is exploration? It's throwing work out.

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Daniel Scrivner (35:02):

So one of the questions I wanted to ask is just what have you observed about the companies that get design right and the companies that get design wrong? And that could be from self-inflicted wounds, just from things that they maybe don't know that they're getting it wrong. What have you observed there? Do you have anything interesting to share?

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Ben Blumenrose (35:18):

Yeah. And we had this mantra at Facebook, which was sweat the details that matter. And you're like, well, what does that mean? And it's depending on the stage, depending on the resources available, spend your time and use design to create the outcomes that are needed at that time. So here's an example. I was talking to this designer who was trying to get the CEO to give them resources to spend more time on a UI system. And so that's a good example where a lot of designers are trying to build good UI systems and this person was like, "I just can't get the CEO to take the time to just look at the V1." I want to get it really good so that the product's really good. I said, "Okay. Why? Why doesn't the CEO have time?" And he goes, "Well, he's just out there fundraising a bunch right now." I said, "Oh, well what's going on with the fundraising?" He's like, "Well, we're a couple months away from running out of money so that's where hid head's at." I said, "Wait. You're two months from running out of money, you're CEO is running around trying to fundraise, and you're fucking talking about a UI system?"

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Daniel Scrivner (36:35):

That's a good point. That's a good point.

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Ben Blumenrose (36:36):

"What are you even doing? What are you doing? You're a designer. Okay? This guy's out there trying to sell and raise money for the company. That's the air and water you need to breathe. If you don't have that, there's no UI system. This UI system is irrelevant. That's why he's not making the time for it. Do you know what the deck looks like that he's going out there?" "No." "Why not? You're an amazing visual designer. Go look at that deck and see if you can fucking help. Do you know people who could invest in the company?" "Maybe." "Do you know one or two people? Go find those people."

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Ben Blumenrose (37:12):

The companies that do design well, they basically understand what are the important needs of the company right now and how can I apply design to those needs? And it's so basic, but you actually see a lot of people doing this wrong, which is the company needs to find product market fit and you have designers polishing a marketing site, for example, or polishing a product that they don't even know is the right thing to build.

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Ben Blumenrose (37:42):

So actually what they should be doing is designing five or six things and testing them regularly. They should be testing every week. So I think that's the thing that I have ... And it might seem very obvious, but it's basically, there's a lot of people that apply resources to things that are not important at that time in that stage of the company, because they think it's the right thing to do. It's like, we need a good brand. Do you? Do you need that brand right now? We need our good UI system. Do you right now? You don't even know if this is the right product to build. You might not even need buttons. Maybe it's all audio based. Maybe it's all AI. So I think that's the thing to me that the people that do it well, they know when to go deep and polish the thing and when to not do that.

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Daniel Scrivner (38:30):

No. So well said. It makes me think of ... I remember when I was at Square, we had someone on the team who was incredibly passionate, that it was finally time for us to come with a style guide and this brand book. And for anyone listening that's a designer, it's somewhat of a contentious topic. Do we codify what we do and paint ourselves into a box? Do we keep it open ended? But it was a great example of ... Looking back, it was just such a terrible idea and I should have been much more vocal about not doing it. And the reason was exactly to your point. It's not that it wasn't useful. And I have my own thoughts that I won't get into necessarily around the utility of it and when it's useful, but it was exactly what you were talking about. There was better things that we could have been doing, and it was just not I think ... Not wrestling and grappling with enough that the tension that exists in the business at any given moment of what actually needs to get done. So I love that point.

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Daniel Scrivner (39:23):

I would love to talk for a second to switch. So we talked a lot about design. Love to switch for a second and talk about investing. And one of the questions I want to ask there, and this may be a overly clever way of asking the question. But if you were to think about how Designer Fund makes investment decisions as an algorithm, let's call it the Designer Fund algorithm, what does that look like and what's your general process and approach to making investment decisions?

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Ben Blumenrose (39:50):

I talked to you about designing venture. And so one of the things that we noticed is that a lot of ... There are investors that shoot from the hip. They meet a founder, they get a gut reaction and they just invest that way. And so we're not that way. I think we really want to systematize and productize our investment process. So we actually have a template of what are the things that we ask companies? What do we want to see? And making sure that companies meet the bar in all the different thing. What's the product? Are they going to build a best in class product? Is there something around go to market here that ... Do we have any signals around traction? So we probably have an approach that is similar to a lot of other funds. I think the two differences, one is that we try to apply a very structured process to everything that we do to make sure that we can go back and say, why did we make that decision and was it the right or wrong decision? Not just like, well, I met that person, they seemed fine at the time. So good process. We want to see good process, good outcomes.

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Ben Blumenrose (41:01):

And then I think the lens that we add that most firms don't add is probably this design layer, which is, is design going to have a meaningful impact on the outcome of this company? And there are certain companies ... Whether it's a science project. It's like, hey, we're trying to ... Lab grown meat. If you can't get this burger to be less than $100 a burger, there's very little design that can apply to this company to make that work. And so certain things like that where there's a fundamental science thing, design is ... It can have some impact, but I think it's very tough for us to say that design is going to be instrumental in the success of the company. So we want to see design be able to play a role in the success of the company.

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Ben Blumenrose (41:53):

And then the other filter we have is impact, which is like, does the company actually move the world in the direction that we want to see? So there are companies that we see that ... I remember back in the day, I saw a company that was LCD screen ads on top of cars. And they're geolocated so it's like, hey, if you're in Soma, you'll see an ad for a restaurant in Soma. Sounds really neat and probably can make money. But it's like, people are already distracted enough as it is. And so do we want moving lit billboards on top of cars? I certainly don't. Does society? I don't think we need that. I don't think we want that. And I think ultimately it might be pretty negative. It might negatively impact.

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Ben Blumenrose (42:35):

And so for us, we actually also add a filter of, is this actually moving the world in the direction that we want to see the world move? We do it just from an intrinsic, we want to have the impact we want, but there's also a greedy reason to do that, which is employees are going to ask that question too. The best people are going to ask, is this company doing good in the world? And if not, why would I work there? And we see this all the time. When I go to designers and I say what spaces do you want to work in? 99 out of 100 will say if there's something in climate right now, they're down to work on that.

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Daniel Scrivner (43:08):

It's a really exciting area.

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Ben Blumenrose (43:10):

Right. It's what's needed and it's going to move the world in a positive direction. If you tell them how many of you want to work in marketing tech, mark tech? And they're like zero out of 100, one out of 100. It's really fucking hard to hire if you're building a new way to do ads, whatever, ad algorithm, because a lot of designers just that's not the thing that gets them up in the morning. And so to us, I just think we want to have the positive impact and I think that that's going to yield up a better performing fund long term.

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Daniel Scrivner (43:44):

I want to ask another question. As I was thinking about this interview, one of the things that came to mind is ... As a designer, you talked about this before. In the areas where a designer founder just spikes really hard. The areas where they're off the charts good is generally around having a very strong vision of what they want to build, being able to bring that to life and being able to understand and tell a story around that. And one way of thinking about that is you can see the potential in something. I see this in a lot of designers I've worked with. Designers have this way of-

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Ben Blumenrose (44:15):

We dream.

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Daniel Scrivner (44:15):

You can show them something that's very half baked ... Yeah. And they can dream or maybe-

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Ben Blumenrose (44:19):

I fill in the holes. I can fill in the holes with the best stuff too.

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Daniel Scrivner (44:23):

Yeah. You can see the potentiality. And so one of the questions I wanted to ask was when you're making investment decisions, how much in your mind are you making that decision on what exists today and how much in your mind are you making that decision on the potentiality and where you think this can go?

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Ben Blumenrose (44:37):

This is so hard. This is one of the hardest shifts I think I've had. Because as a designer, every job I've had before being an investor, when someone comes to me with, "Hey, here's an idea I have," and in my head I'm like, "Yes. That's an amazing idea. And here's how with design we will make this global, amazing, impactful ... I can already see, it could work like this and it could work like this and we can do this and da, da, da." Or at least for me, I'm inclined to dream big and think positive outcomes and see this thing manifested into all its glory. Well guess what? As an investor, you're not the designer on the thing. At best, you're a coach. You can guide. You can help recruit. But you can't design the thing.

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Ben Blumenrose (45:34):

So we do two things. First we say, okay, you want to build company X, let's dream ... One of the things I tell founders is, "Let's dream together. You and I right now. It's five years from now. So right now, August 18th, it's 2022. It's August 18th, 2027. Daniel, what does the thing that you're building look like that is meeting every one of your wildest dreams? What does the product do? What are the people that it impacts? All that stuff. Let's dream together." And that's an exercise. Let's just do that together. And then I think, okay, given that's where you want to go and the team that's in place right now, how do we feel about that delta and what needs to happen to make that dream a reality?

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Daniel Scrivner (46:23):

That's where you crush their dream, Ben. That second question.

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Ben Blumenrose (46:27):

Yeah. That is where I'm like, well, you need a designer or at least 50 for what you want to do. So I think that's something that as an investor, I've had to temper a little bit of this, yes and a little bit. And you have to have a little bit of skepticism. And honestly, I don't know. I think we'll see long term it's tough because it's easy to be like, well, this won't ... I've seen seven companies ... When Facebook was raising money, there were 30 social networks that were around at the time. There's a good reason to say that'll never work. And guess what? It did work. So I think I'm trying to find the right balance of let's dream together and let's think about what could this be if everything goes right. But then also temper it with realistically, does that vision fit with the skillsets of the founding team and their ability to execute and all that good stuff? So that's a shift that I've had to happen. But it's definitely hard because as a designer, you just want to work on all the things and make them all manifest into their best selves.

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Daniel Scrivner (47:49):

Well, totally. Yeah. Just to put a point on that, I feel like as a designer, you can extrapolate out from where this is and come up with this really appealing, really exciting vision. And it's easy to just be like, that's it, I'm going to invest on that. So it's great to hear you talk about that struggle because oh man, do I struggle with that.

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Ben Blumenrose (48:07):

And it's also you want to make sure that does your dream match what they're dreaming?

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Daniel Scrivner (48:13):

Yeah.

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Ben Blumenrose (48:14):

You're like, "Oh yeah. And it could be this and this and this." And they're like, "Yeah. Yeah, I guess so." And you're like, "Whoa, whoa, wait a second. What I just said, is that what you want to build or is it something else? Because if it's something else we need to talk about that." So I think you want to make sure that you're helping them get to the thing that they're going to work on their own and not pushing your own agenda because ultimately then that's going to be the tension where you're like, man, I was really we'd build X and then-

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Daniel Scrivner (48:40):

And your agenda doesn't matter. Your agenda doesn't matter.

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Ben Blumenrose (48:41):

Doesn't matter.

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Daniel Scrivner (48:47):

This has been one of my favorite interviews in a long time. And it's just another way of saying, I would love to ask you 50 more questions. So I'd have to be a little bit choosy about how we're going to wrap up. And leading up to this interview I asked the Designer Fund community ... You guys have done an amazing job of getting hundreds of designers all around the world that love design as part of the Designer Fund community. I asked them what questions they would love to hear you cover and I've picked two that I'd love to talk about really quickly. One is from Mich Lynn. And the question is, "Designer Fund is obviously invested in a ton of fantastic companies. As a unique and truly design centric, venture partner, what are the core qualities and values that you look for in startups and builders?"

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Ben Blumenrose (49:29):

In startups and builders. Well, we talked a little bit about this, but basically are they impacting one of our core areas of impact? So it's healthcare, sustainability, prosperity. Does the founding team demonstrate that they value design? Have they invested in design? Are they showing that they can build a best in class product? And then the rest of it is very similar to other ... Is there any signals of traction? Do they have a well rounded team that has both domain expertise, great engineering, great product and great operational excellence also is something we look at now. We look at has the founding team worked together before and has shown the ability to collaborate in the heat of things and build things together before? Because I think that's something that's undervalued a lot. Yeah. There's a bunch of other stuff, but those are maybe the key. It's product, team, and space/impact areas that they're focused on.

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Daniel Scrivner (50:32):

Yeah. That's the 80/20. The second question, last question from the Designer Fund community is from John Feragin. And this one's a little bit different. You talked about at the beginning that if Designer Fund was successful you hoped to see a wave of venture funds focused around design but also design angels. And another thing that a lot of designers are really interested in is being a design advisor. So this question from that angle. And the question is, "What has stood out to you as the most impactful ways designers can value to early stage companies as advisory angel investors?"

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Ben Blumenrose (51:04):

Yeah. As advisors, you don't have that much time. So you have very limited time. So typically the best thing as an advisor that you can do, and that's we try to do, is basically teach them how to fish. So I would say don't try to be their designer. So if they're like, "Hey, I'm struggling with this marketing." "I'll just do it. Give me six hours." Because then once you're done, then what? So I think the best thing you can do is find them great designers they can work with, great freelancers they can work with, great agencies they can work with. Help them hire amazing talent. I mean, that's one of the most valuable things a designer advisor can do is actually help them hire that first hire. They can also make sure that that first hire has a good experience. I mean, that's a big part of what we do is once you hire that first designer, well now they're so solo designer, lonely person at the company fighting the good fight.

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Ben Blumenrose (51:59):

Well, if Designer Fund's around the table, at least that person knows that they're supported by dozens of great designers that they can access. So I would say that's where the leverage is. Is getting them the right resources and making sure that those resources are doing the good work versus actually doing the design work, which I think a lot of designers want. That's what they want. They're like, "Yeah. It's almost like freelancing a little bit and I get equity for doing some design." And I think that there's some value in that, but I think ultimately you're better off actually not giving them the fish but actually giving them the tools to fish on their own.

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Daniel Scrivner (52:39):

Yeah. Don't just solve the current pain, but help them be able to those problems well into the future. Goes back to that process point you made earlier.

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Ben Blumenrose (52:45):

And it's super hard because you could spend 20, 30 hours recruiting and have nothing to show for it. And you're just like, oh, I guess I haven't done anything. But the reality is once you help them hire that person, all of a sudden it's like that person's going to be working eight to 10 hours a day. Within a week they'll have already done more work than if you're spending, whatever, let's say even two hours a week. So that person in one week is going to outpace you spending months and months on this problem. So I think people don't realize just how impactful recruiting is. And by the way, for any designer listening, you should be spending a lot of time recruiting for your company. It's another thing that a lot of designers don't spend enough time recruiting other designers. That's a really impactful thing to do because once you get another designer in there early on, has a huge impact on the output of the team.

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Daniel Scrivner (53:38):

I could continue to ask you questions. I would love to ask you questions for another hour, but it's time to wrap up. Thank you so much for the time, Ben. This has been incredible.

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Ben Blumenrose (53:46):

Awesome. Awesome. Yeah. Thanks for having me.

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Daniel Scrivner (53:49):

Thank you so much for listening. You can find the show notes and text transcript for this episode at outlieracademy.com/131. That's outlieracademy.com/131. And you can learn more about Designer Fund at designerfund.com or by following Designer Fund on Twitter. At outlieracademy.com you can find all of our other investor interviews profiling investment firms, including Driehaus Capital, NFX, Greycroft, Pantera Capital, Compound Kings, Foundation Capital, Moran Capital Management, and many, many more.

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Daniel Scrivner (54:22):

In every interview we deconstruct the ideas, frameworks, and strategies they used to generate incredible returns and track records. You can find videos of all of our interviews on YouTube at youtube.com/outlieracademy. On our channel you'll find all of our full length interviews as well as our favorite short clips from every episode, including this one. So make sure to subscribe. We post new videos and clips every single week. And if you haven't already, make sure to follow us on Twitter and LinkedIn at Outlier Academy. Thank you so much for listening. We'll see you right here with a brand new episode next Wednesday.

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On Outlier Academy, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge—in business, investing, entertainment, and more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today.

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#131 Designer Fund: Building the World’s First Design Centric Venture Capital Firm | Ben Blumenrose, Co-Founder & Managing Partner

#131 Designer Fund: Building the World’s First Design Centric Venture Capital Firm | Ben Blumenrose, Co-Founder & Managing Partner

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#131 Designer Fund: Building the World’s First Design Centric Venture Capital Firm | Ben Blumenrose, Co-Founder & Managing Partner

#131 Designer Fund: Building the World’s First Design Centric Venture Capital Firm | Ben Blumenrose, Co-Founder & Managing Partner

About Designer Fund

Chapters

Our Favorite Quotes

5 Ways to Dive Deeper

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Transcript

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