8VC's Design Advantage

‍
Summary

In this episode, Luke Bugbee, Head of Design at 8VC, reveals the strategic importance of a full-time design team within a venture capital firm, illustrating how design is leveraged to create massive growth and value at the earliest stages of a startup.

‍

View more episodes and subscribe to our series here.
‍

Transcript

Tell us a little about yourself. 

Sure. I am Luke Bugbee, I'm the head of design at 8VC. We're an early stage focus venture capital firm. We have six billion dollars under management or so, and we invest in a wide range of companies. So we have various theses. So we have logistics, defense, IT enterprise, healthcare, biology, and some other things in between. So we're pretty wide focused, but in terms of the financing stage, we focus on the pre-seed to series A range for the most part. Sometimes we do series B, but not super often. But I run our design org for the firm.
‍

What was your journey into design and to 8VC?

Well, it's pretty unconventional for VCs to have full-time designers. I think the most common role is a designer in residence that some VCs have for a long time. But 8VC was started by Joe Lonsdale, who's one of the Palantir founders. And after Palantir, Joe also co-founded OpenGov and Addepar and a few other companies. And I think from Joe, he saw just a serious velocity differential between companies that focus on design and those that use it as an afterthought or a way to paint kind of a pretty picture over kind of an ugly beast. So Joe has always really prioritized design, top-down. 

When I was still in college, I worked at two startups that Joe Lonsdale had founded and invested in OpenGov. He was a co-founder of OpenGov. That was kind of like my first foray into Silicon Valley. And then after OpenGov, I worked at another GovTech startup, which Joe angel invested in. And when I graduated college, I'd worked at two of these startups. And I came to the firm and was like, hey, I worked at two of your portfolio companies. Are there any others looking for full-time designers? I'm loving this. I want to kind of keep up this work I'm doing. And the firm at that time was just getting started. You know, it was, I think, four months after 8VC began nine years ago. And the firm was like, well, hey, we could use a designer here.

We can talk a little bit more about this later, but I honestly was really eager to work at a startup and build things from scratch and build products and kind of live the life cycle of a startup. And I wasn't super thrilled about joining a venture capital firm full-time because I didn't really know what that would entail, if that was we're going to be designing spreadsheets or pitch decks or blog graphics for the rest of my life. But, you know, I had just gotten married and I was like, hey, I need a full-time job and this is a good stable job. But soon after I joined the firm, the role evolved quite a bit to be much more kind of build-centric, lots of UI branding, kind of like running around doing different things for different types of companies. And this really was creatively stimulating for me. And so I've managed to kind of craft my dream role here over the past nine years. But it's a very long-winded way of how I landed at the firm.

‍

Most people would love to work at 8VC, and you joined because you needed a job. 

I think the brand of VC has kind of evolved over time. I think also just I'm more of a build archetype. Like I want to be in the trenches with startups. And I wasn't sure if I would be able to do that at a VC because the common VC tropes are… we just send emails, let me… let me know how I can be helpful and then offer no help once the check is written. That was kind of my impression of VC until that point. But once I joined, I was like, oh, we're actually going to be starting companies from scratch. And this is awesome.

‍

Tell me a little bit more about the evolution of your team.

Before talking about the design org, we started this program at the firm called the Build Program. Essentially we realized that to be good investors, you also need to be good entrepreneurs and builders. It feeds into itself. The better builders are better investors and the better investors are better builders and so forth. So after Joe's Palantir days and the firm started, Joe was involved in founding a couple more companies unofficially. So Affinity was one of those. Affinity is this big CRM that many VCs use at this point. And then a GovTech company called Esper and several others. We were starting these companies while we were running the VC business. We decided to rope them together officially into this Build Program where every year we found two, three, four companies and these conceptual gaps that we're able to uncover as people are pitching us. And so that's kind of where I found my footing. I love all types of design and all types of companies. I'm just very interested in all the different types of companies. And so I want to be involved in all these companies in various ways, not just doing product design here and branding over there, but just run around with my hair on fire. 

But because of that, we've kind of realized we needed variously talented people. We have a full-time graphic designer now, just because that was a huge need. We do a lot of branding for companies that we get off the ground. We have a product designer who's focused on 3D and web as well. He's generally focused as well. We have another guy on the team who's more of a generalist and he focuses on talent. And then two 3D artists. We have six people on the team and we all work in lockstep. We've all worked together for a very long time. The 3D guys have been around for six years. So we have quite a bit of longevity. For all of us, it's really our dream job and we've built a good friendship.

‍

How do you evangelize the importance of design to technical founders who don't naturally prioritize it?

It is a benefit. This isn't true of many other VCs. I have other friends in design roles at other VCs. But there really is a top-down mandate from the partners at 8VC. If a company looks hideous and we get a pitch deck where the subject matter or the meat of the business looks good, but it just looks hideous, the partners will be the one to push the founder towards design. They'll say, “Hey, you need to go talk to Luke.” We'll either hire an agency or maybe if we have capacity with our internal design team, we could handle a rebrand or handle your materials for you. So having that support top-down certainly helps that I really don't need to fight for a seat at the table. 

But on the off chance that you do run into those people who don't seem to prioritize it naturally, you could clearly point to instances where design does seem to have moved the needle. For us, we're early stage investors. A lot of the focus of early stage company building is hiring, where you're just trying to tell the best story to investors, to your first customers, to get them to trust you, to the smart engineers and designers and builders, to try to convince them to join the company. Because then you're going to build the actual thing that's going to make the money. That's really a storytelling issue. 

Just by pointing that out to a founder that if you guys look amazing, you're going to have really smart people that want to work at an amazing company. Any smart engineer is going to want to be able to brag around the Thanksgiving table that they work at this really, really cool startup. We're trying to solve that cold start problem of how do we tell your first story? Because then by telling that story, you'll be able to build the thing and then the thing will tell its own story later.

I think that's a pretty compelling message to most founders. There's enough success stories now of well-designed companies. You have Palantir and Anduril. Both have set a very high bar on the design front in very non-design oriented industries. Before that there was SpaceX, which did the same for space exploration. They've taken a special interest in making sure uniforms and the spacecraft are all as we might imagine futuristic uniforms and spacecraft looking. It's not about pure utility. It's about beauty as well.  I don't think that's a hard message to sell, honestly. 

Frankly, if someone's having a hard time getting it, it depends where they are in the portfolio, but it really is not worth my time to really meet over and over again with someone who is not getting it. I can just have a partner email them if I need to. Or they'll realize it eventually. Hopefully it's not too late, but then they'll come knocking. That's happened a few times too. It's like, “Oh, you don't need a brand? Okay, good luck.” And then six months later, “Hey, I know you were telling me to get a good brand. Can we talk now?”

‍

How do you think about ROI as it relates to brand building? Are there any examples that you might have?

Again, we're involved so early with these companies that our focus is on building the foundation of a company and making it a magnet for really smart people. That's what Palantir did. They built this reputation of Palantir where the smartest people go to work. They pay the top salary for the best people because the best people do the best work.

And because we're involved at that stage, I view most of my metrics being how effectively is this company going to attract people? Saronic would be a great example. Saronic is one of the defense companies that was incubated within 8VC. Dino is this ex special forces, Navy SEAL who spent maybe a year with us or so and pretty much decided to launch this company, Saronic focused on autonomous surface vessels for the Navy. They're building essentially drones that float on the water and drive themselves and can do any number of things. 

But Dino from square one, he was like, “Hey, we're going to build a generational defense company, hardware manufacturer, build software to handle autonomy. We're building a real business. This is not a garage stage company.” From square one, Dino really prioritized brand. Even when he was still at the firm, he was like, “Hey, we need a kickback brand. We're going to take this brand into the Pentagon, literally within the first four months of the company. We're going to meet with senators and everything. This needs to look like it's existed for a long time and that we're grownups. This is not a Stanford college student spin out.”

And so we did that initial brand. They launched with it. They took those meetings. They raised their series A. And then Dino again came back and was like, “Hey, we need to scale this brand because we're going to grow at lightning speed.” We connected them with a number of agencies. They ended up signing with an agency. They paid top dollar to get a really good rebrand done. And sure enough, Saronic has grown from launching to about a $4 billion valuation now in 18 months or maybe two years. The speed is just insane. 

But you know what's funny? Because I built their first website and did the first brand, I was CC'd on all the emails that would come through the website just to make sure that Zapier is working. Slowly I would see one email come through. Hey, I'm interested in working at Saronic. The next day, 10 emails come through. Hey, I'm interested in working at Saronic. I click on these profiles and these are insanely smart people at MIT trying to drop out of MIT to join this. I don't know what Saronic was doing to generate this interest. It just continued. 

The next day, 20 emails would come in and I clicked through all of them. Many of them were hired too and I ran into them at the Saronic office. But that's a very good metric: are smart people clamoring over each other to work there? If so, then we've done our job because they'll build something valuable once they all get in the room and start drinking some energy drinks. Obviously the revenue comes later. But by the time they're building revenue and building sales team and SDRs and all that, we're actually really not that involved at that point other than just in an advisory position, you know?

‍

Do you have any thoughts on impact on valuation?

It does impact valuation quite a bit. The fund's been around about nine years now and 8VC fund tends to last 8 to 12 years, within that range. It's expanding more and more. But essentially you're expected to send the money back to your LPs around that window so people are starting to think about exits and so forth around eight years. Our first fund has all these companies that are all in that stage. We're trying to figure out, “Okay, who are we? What are we going to do? Are we going to get acquired? Are we going to go public? Are we going to merge with someone?” And so those early stage companies are actually starting to reach out and ask for more later stage brand advice and/or rebrands or referrals to agencies. I don't have the data in front of me to back this up, but if we can do a last minute rebrand on a very ugly company that's built something valuable and that rebrand can increase valuation and tack on a couple million or 10% of the M&A offer, you've paid back your entire brand cost and then some many times over by doing that. 

Some founders can't quite understand that. They just view it as expensive. We could hire a full-time team for a year with this price. But if you're going to raise the valuation that you get offered by $10 million, of course you should pay for a really nice brand. Granted, you don't want to just be signing up for rebrands willy-nilly for no reason. There should be rationale behind every decision and why your current brand isn't working, what needs to change and what you're trying to achieve. But if you are going to seek to get acquired or to merge with someone, it's worth looking good. This is common sense. Anyone who sells a house, of course you're going to go paint the outside of the house and you're going to blow insulation in the attic and you'll fix up the stepping stones. Of course. It's worth spending $1,000 doing that if someone's going to offer you $10,000 more for your house. The payback is very clear.

‍

What are you seeing across the lifecycle of a startup in terms of engagement in brand development or rebranding?

I don't know if this is just the nature of our portfolio. I don't know if this is industry wide, but it seems everyone wants to launch at this point with a good brand and put their best foot forward and have a big debut. I don't know. Almost like a mini Apple launch or a trailer dropping for a new Hollywood hit or something. It seems like that's the norm now. Whereas before it was like, we'd have one company amidst the portfolio that we're going to put all this focus in, making sure this announcement is ready. But now, we probably have four or five companies in parallel at all times that are regenerating assets for videos for building a website for. There's just a more widespread understanding that we should put our best foot forward when we first announced. You only have one opportunity to make a first impression so let's not squander this. Now you're seeing these very high production announcing this XYZ new company. That didn't happen before as often. Now it seems to be the norm. To your and my benefit, I would love for every company to look super awesome the moment they drop. But it's also more competitive because before if you were the one company that had the sexy reveal video, you would generate a lot of interest. But now three of them drop on my Twitter timeline a day. You're really competing against all these other companies. 

Obviously, at the end of the day, whatever interests you generate from those hype videos, it's neither here nor there if you can't follow it up and actually design a real product and brand of longevity. We're not just in the business of hype generation, but we have two product designers on our team. We're deep in the weeds with the founders. After we brand a company, we’re in their UI designing their actual products. With Saronic, we actually designed the first version of their actual boat. We had their CAD files. We're in there generating the real thing. It's important to do that stuff, too.

That stuff's fun. We're doing more and more hardware these days. I know you guys just wrapped up Bedrock, but that stuff is just so much fun when you can go and see your physical thing out in the wild. Granted with Saronic, what they're building now looks nothing like what we originally designed for Dino. Epirus is another big defense company that we did the first brand for. Now, this logo we did is emblazoned on the side of these massive anti-drone laser microwave weapons. It's cool to be there in person and see things physically in front of you.

‍

What unique branding challenges do you think your portfolio companies have in addition to the competitiveness of the market at launch?

There's a natural gravity that comes from when you have a clear front runner in design in an industry for all the other folks to gravitate toward that brand. You have it in Palantir for big data, tech defense, a number-crunching company that defines a bunch of companies that look just like Palantir. And then Anduril as well. There's a lot of defense hardware that's being spun up right now. Jen over at Anduril has just done such a good job defining American defense hardware design that everyone comes out looking like Anduril. I've talked to her about this. But on one hand, you can be competitive about it and a little bit sour about it.

On the other hand, she deserves a lot of credit and the rest of the design team over there because there's just so many companies that are launching looking just like Anduril. It's cool because it defines the design language for American defense at large. When that happens specifically in that industry, when you encounter American defense hardware on the battlefield in the future, it's going to look very American because they all look similar. That's actually an ideal, but you see it in other industries as well. 

The 8VC design team is only handling a subset of the companies within the broader portfolio, which is 400 plus companies. But inevitably any branding project we do, we do a full survey and discovery of the industry of what is everyone else doing in this space? What looks good? What looks horrible? What are some sand traps we want to avoid? You see in biotech and healthcare, this medicinal blue that's used throughout every single brand. This illustrative style that's used everywhere. We try to avoid those common tropes.

Thankfully, you occasionally get a really courageous founder that believes that amidst everyone around us, we want to be super different. We're doing a really cool health insurance company right now where the founder was like, “I want to be liquid death for healthcare insurance. Just totally different from everyone else.” And so we kept generating all these brand options. You have your span of things, the risky one you think they're going to say no to. Every time, Alex has chosen the most extreme version. We're like, this is so much fun. Now we're animating all these animated graphics. We have a character for one of the logos that moves. It's just a ton of fun. 

Another place where this happened was Resilience. It's a big biomanufacturing company. Resilience.com is their URL. They're another one where we incubated it along with another biotech firm, Arch Ventures. It's Bob Nelsen's firm. In the midst of COVID, there was obviously a huge shortage in our ability to make really complex medicines here. We have offshored that whole business. We decided we're going to raise a bunch of money, buy a bunch of factories that exist already, turn them around with first principles that we've learned from Silicon Valley and build all these efficiencies into the business. The founding CEO there, Rahul, was also like, “Look, CDMOs, contract design and manufacturing organizations, are really boring.” 

They're the invisible person behind medicines. No one knows what the brands look like and the ones that do exist all look like the exact same company. Again, it was awesome just to see him recognize the homogeneous industry brand landscape and intentionally want to skirt around it. We ended up doing this extreme brutalistic brand for Resilience that's all black and white, a very abstract logo that's very architectural, very sharp and cutting edge. It's a very badass brand for a CDMO. I'm not going to take any credit for it. I'll take a tiny bit, but they grew to a $9 billion valuation in 24 months, which is just outrageous execution. They raised all this money, bought all these factories, turned out all these medicines, build all these partnerships, use those to raise more money, to buy more factories.The flywheel just kicked off. It's really, really cool.

There's another shift that's happening too, where there's more of a tolerance for extremely different players. Before SpaceX and Palantir worked really hard to change the government's opinion on working with private companies, you had to be around for a long time and look like all the other people to be taken seriously. It's true of all the other industries, where  you don't have the snobbery you used to have. 

The reason I say this is because when I was at OpenGov, we worked with governments building financial platforms to run government budgets and so forth. There was a sense that we didn't want to over-design things. I did a lot of the Marcom design there. If we went too sexy and too extreme, this is being presented to city managers at a little 20,000 person town, you're going to turn them off. You're going to look very illegitimate young bucks who don't really know what we're talking about. But I don't think that's the environment we work in anymore. You're not going to turn people off the way you used to by being over-designed.

‍

What lessons have you learned over the decade you've been working with all of these companies?

I have my own personal biases that align with at least some of our partners, which is I do think beauty is important in branding. I'm going to get in trouble for this, but I'm very anti-design thinking exercises. If you go through a design program at a college, they teach you all these processes you have to go through. We have to do all these user-generative interviews and put a bunch of post-its on the wall and spend three months doing it. For me, my entire career is early stage company building. I've just seen the importance of shipping the thing and building the actual thing and launching. It's okay. Done is so much better than perfect because you'll never get to perfect. By the time you do, the whole company has pivoted three times and there's a new CEO there. You really don't have the time available to sit around and talk to every industry player. It's so much better to just trust your gut, launch a brand, and then you can always rebrand later once you do know what you're building. It's okay to do that. 

The other part I mentioned earlier is just beauty. Joe Lonsdale, our general partner, is hardcore into classical design language, even oil paintings and Romanesque, Greco-Roman art and columns and Corinthian columns and so forth. I'm actually really into that stuff too as I just love looking at old masters. I prefer National Museum of Art over MoMA because I just love the old masters. The Renaissance was kicked off in part by this renewed interest of going down to Rome and seeing what the old masters did. Someone found a copy of Vitruvius's principles of architecture. It's the four laws of architecture or something that Vitruvius wrote. Vitruvius, he lived during the time of 30 AD. He just wrote down what is classical architecture and why do we design things the way we do. Michelangelo and da Vinci and all these people, they referred back to Vitruvius. Vitruvius had these core principles of beauty. Every building had to accommodate beauty, strength, and utility. 

That's true of branding where you have all these modern art people who come in and just think beauty is relative. Therefore, we're gonna intentionally glorify the most ugly thing here because it's beautiful in its own subversive way. Let me give you an example. The staircase leading up to the temple, they wanted whoever steps onto a staircase anywhere in any national monument to end like they're traversing the staircase on the same foot that they began because it created this sense of balance. They designed their stadiums with the acoustics so that the resonant frequencies would be harmonious, not dissonant. They knew how the sound waves would interact with each other when they bounced off back to the earth. They had these huge copper reflectors. They're thinking about actual rationale. 

I just want to be involved in that side of design, of designing actual beautiful things with a purpose, not extreme or ugly things to make some political message or something. It should fundamentally be beautiful. Specifically where that comes into play is when we interview all these fellows. We have a whole design fellowship program where we have these young designers at various schools around the U.S. applying, we filter them into our portfolio. 

When I do portfolio reviews, we go through 50 a day. I go through them very quickly. And essentially, the first filter is does this look nice? Does this look beautiful? It seems like a fickle thing. But essentially, if you're a UX designer, I don't think it's acceptable for you to ignore visual design entirely. Because that's fundamental to the user's experience, how they feel using your product. Is this delightful? Is this beautiful? Am I enjoying my time here? 

We have UX designers who apply that. It's like, here's all the post-it notes I wrote while interviewing people. I was like, “Good job but the end product looks hideous.” Fundamentally, those are the conclusions I'm comfortable living in. I understand in later stage companies where you're trying to move the needle of revenue and so forth and build a bigger business and do different complex things, doing those six month long deep design exercises is more important. But the world I live in, launching new companies from scratch, we just need to move super fast and make sure it looks super good.

‍

Is there any other advice that you would give to a highly technical founder or somebody who's skeptical about design?

Yes, I've seen it happen a few times where initially it'll seem like they really prioritize design. When they come to it, they have really strong opinions on how the thing should look and feel. Maybe that's generated by some strong reaction they had towards something at some point, or they have a spouse that was a designer at one point.

Because we're jumping into different companies that do different things, in one day we'll work at a fintech company, defense company, and a biotech company, we'll be doing branding at one and product design at the other, I've really learned to just check my own opinions at the door and try as best as I can to approach a company from a blank slate. In our first meeting, a founder will ask me for my opinion about how they should look and where they should be positioned. I don't know. Let's talk. What kind of company are you building? What are other people doing right now? What's the trend of brand right now? Where do you want to place that trend? Do you want to ride that wave? Or do you want to counteract that wave in some way? I don't have any opinion until I'm required to have one. But in order to generate that opinion, I'm going to do all this research and discovery and talk to the founders. 

Advice for highly technical founders would just be to accept that design is important and that you should be well-designed. But any opinion on what that design should look like, allow yourself time to generate that opinion and allow it to be informed by real data. Like that Vitruvian concept. There's a rationale behind every design decision. It's not just personal taste. Obviously you do have taste that comes in at some point, but that can really get in the way. You can start building a defense company and accept that it should be like Palantir from day one. Maybe you should be the anti-Palantir. I don't know. Maybe you should look like Palantir's little brother that looks somewhat like it, but is different in some unique way. I don't know. Let's figure it out together.

This actually is really funny. My wife is really into interior decoration. She's very design-minded in other spaces, and she will ask me my design opinion about something that's not branding or product design or has nothing to do with Silicon Valley. I'll tell her, I don't know. She'll ask me, do you like this house or that house? I'm like, I'm not quite sure. I need to look more into it. I need to think more about it. I'm okay not having an opinion on design things until I'm required to have one. That can be frustrating for her sometimes. But at the end of the day, it's helped me in my career to just check all my opinions at the door and then generate them based on things with real rationale.

We have very nicely designed offices. Thankfully we worked with really talented architects to design those. I don't get any of the credit, but they've won all kinds of awards. But even just giving people tours of the offices and them asking about design decisions and stuff. I'm like, no, I actually don't have many opinions here. I think they did a great job and I would trust whatever future opinions they have because I could have made this office as beautiful as it is.

‍

What's on the horizon for 8VC's design practice?

We're always streamlining our processes internally. We've hit a good pace on our Build program. At one point, we're working on one or two companies. Now it seems like we're working on three to four at any given time. I want to try to build better communication. What is the process here? Are we gonna do branding? Are we gonna be involved in product? How much of the talent side are we gonna handle after we launch our brand? A lot of founder communication stuff.

We are also just ramping up our talent arm quite a bit. We have a whole talent team. We're focusing a lot more on design talent as a firm, throwing more design events, focusing on our design fellowship, trying to get regular coffees on the books with top designers in each city and just trying to figure out what's going on in their life and what they're interested in. There's really cool natural networks that get built out of that. All the best people know all the best people and like to just hang around and drink coffee and shoot the breeze and talk about passion projects and gardens they're watering and so forth. That's the focus right now. 

We have a lot of really cool companies that are launching, some really important ones, a rare disease company that's focusing on saving children's lives and that insurance one I told you about. We launched four defense companies last year so I was feeling a little defensed out for a while there. All this healthcare stuff is really a breath of fresh air. But that's the focus these days.

Is there anything else you want to leave people with?

A big focus of mine is trying to convince top designers that building companies and being the first designer at companies is a worthwhile endeavor. For a while there, you had Meta and Google and places paying designers just an outrageous amount of money. It's really a hard sell to be like, "Hey, how about more risk, immediate liquid reward, but a lot more fun?” It’s a harder sell. These days, salaries are smoothing out a little bit, but it's just super fun to build something from scratch. Working with Dino at Saronic, him telling us, “Hey, I want to start this company to a $4 billion valuation in 18 months or so,” to have seen that life cycle and also the designers that connected with them and the first engineers there and seeing them run all teams, the momentum is just intoxicating. It's just super fun.

Where can people learn more about 8VC and find you?

‍8VC.com is our website. You can find me on Twitter, or X rather. My handle's @bugmango, but Luke Bugbee is my name. LinkedIn as well.You can find me on Twitter. I can't promise to post anything super interesting to you. I post everything design and non-design related, kind of a space geek and love philosophy and religion and so forth.

‍

Keywords

brand strategy, brand design, brand value, startup valuation, brand differentiation, Studio Everywhere, Insights Everywhere, Luke Bugbee, 8VC