Foundamental | Sebastien Michaud

Sebastien Michaud

Investments

'To spot talent is as complex a faculty as studying the intricacies of a novel technology. Yet, it is often skimmed through, and replaced with shortcuts.'

My Backstory

Where were you born?

I grew up in Essen, the industrial heart of Germany, where people are known for being hard workers, straight shooters, down to earth, and easy to grab a beer with. My parents taught me the value of dreaming big and working hard. My mother founded a successful biomedical startup in the 1990s, growing it for 15 years before selling to a large firm. She taught me about perseverance, breaking through barriers, and doing simple things better than overconfident incumbents. My father started as a car mechanic before founding his own dealership in the 1970s. He saw success come and go with industry changes, but his amazing relationship skills allowed him to relate to anyone.

Starting at age 8, my parents had me help out on a small farm, which helped me appreciate physical labor. In my teens, I worked admin roles at my mom's startup, learning efficiency and attention to detail. At 16, I took a monotonous job besides high school at a bank’s account statement printing department that taught me patience - which is valuable as an early-stage investor. I studied energy management and finance, doing my undergrad in Germany before a Master's at Purdue and Tsinghua.

After university, I started in corporate finance and M&A, focusing on renewable energy deals. I then joined a large utility amid industry transformation during and after Fukushima. My role changed to business development in batteries, grid storage, and distributed energy. I also supported early tech investments at the intersection of energy and power retail tech. Later, I helped a global engineering firm leverage its vast hardware expertise to partner with early-stage hard tech founders - right before embarking on my own journey as a founder (unsuccessfully).

Where were you born, where were you raised?

I was born in Lyon, France. Then was in Paris from 0 - 3 years of age. Ultimately raised in Milan, Italy from 3 to 18 years old.

What is the area you are from famous for?

Fashion.

What did/do your parents do?

My father is in insurance. My mother in executive coaching.

Any siblings when you grew up?

I grew up with one big sister, 2 years older.

What are the two things (outside of school) that you spent the most time on when you were a kid or teenager?

I skied as much as I could in the Italian Alps and raced in the Ski Club. Went every weekend and school holidays during the ski season.

Also did a lot of debating, and travelled across Europe for debating competitions.

What are you missing from your younger years?

I miss skiing. Berlin’s not the ideal choice for it.

Did you have a side job during school?

I had one gig I did a few times: I had worked as a voice actor for a French language book for Italian schools.

What did you study, and where?

I studied Economics with a concentration in Investment & Trading at the University of Bath.

Summarize your work after university and before Foundamental.

I worked in management consulting at BCG, in Milan. Then followed in Strategy at PayPal where I learned about startup acquisition.

What is your story of getting into Foundamental?

I was lucky to have discovered Foundamental. It was important for me to join a team of conviction-based Investors, with a clear thesis, who have the courage to define opportunities and approach the founder community with intent, rather than scouting the market opportunistically. The assertiveness of the Founding Investors, the flat hierarchy of an entrepreneurial team, and the intellectual challenge of broaching subjects most of us are not exposed to in every day life, were, combined, the reasons I was determined to join.

I got a chance to start working at Foundamental, as a Junior, and had the opportunity to develop myself as the Fund continues growing in success.

I Am On The Lookout For

What makes a great VC investor?

I make the distinction between good and great.

Greatness is a relative concept, and must therefore be attributed to skills very few Investors have. Whilst many Investors can scout deals, build relationships, understand venture maths, and so on, the rarest contributing abilities are:

A flare for what has the potential to become a generational company. I purposefully use 'what' as a loosely defined term. Because more often than not, making such a call requires the consideration of multiple factors - context, timing, assets, technology, environment, and the 'who' behind the 'what'… The flare is developed beyond just observing all these factors and evaluating them as isolated entities, but connecting them all together. Creative thinking is often referred to as the ability to connect things. Creative thinking is the 'edge' layered on top of the well-read, hard-working, polished, analytical, informed and sociable Venture Capitalist. It is the 'great' on top of the 'good'.

A phenomenal understanding of the person you have in front, resulting from deep-seated empathy. In the current Attention Economy, where reputation is currency, where professionals yearn for the spotlight, fight each other off with demonic pride, and post boastful verses on LinkedIn threads, esteem should go to those who stand quietly, directing their focal energy to the people they have in front of them, and make the cognitive attempt to truly understand that person. To spot talent is as complex a faculty as studying the intricacies of a novel technology. Yet, it is often skimmed through, and replaced with shortcuts. To have empathy, means to truly listen, to cut through the noise of prejudices and conventions, and to be made aware of one’s own biases. Empathy is an indicator of greatness.

In this era of Venture Capital, VCs are no longer scarce gatekeepers of access to capital, for the founder community. As such, great VCs evolve to put meaning behind 'value add'. A great VC commits to, and hones an expertise which guarantees recurringness in how they accompany Founders in their journey. VCs who understand this specialise. In an industry, in a business faculty (hiring, distribution), or in something else… VCs have the luxury of choosing. But whatever they choose, they must become best-in-class in.

What are 3 things you look for in a founder?

A deep and unique understanding of what people want. It starts with the customer.

A well-defined purpose and an intrinsic and fierce willingness to reach it. The purpose can be as simple as 'winning a market'.

An ability to find the best people to build with (be it through complementarity or mission alignment), and retain them through leadership.

What are the things in a business that excite you?

My answer will change in 2 years, and that is the beauty of Venture. Everything is moving, always. Business models that seemed like the epitome of success some years ago, are now made redundant by a new breed of models. Founders challenge the markets, constantly. They let their markets shape their vessel - their business -, and the business shape the market.

Fundamentally, I look at products that customers fall in love with. I look at the extent to which the product influences the life of a customer (there is a certain magnitude to building a venture-backable startup). Businesses that excite me do not plan on operating, in perpetuity, within the boundaries of a rigidly defined market structure and value-chain. They invite structural change, and get their customers to be pioneers of that change. A great business not only brings in technological innovation, but social innovation, in how we engage with our environment.

What are mistakes that AWESOME founders don’t make, but many other founders make and you see repeatedly?

An awesome founder is able to understand when they made a mistake and quickly rectify that mistake.

Fundamentally, the above is an indication of self-awareness, critical thinking, and ability to listen to others.

What are values that are ultra important to you in other people in business life. Why?

Community and collaboration. A strong culture tying people together. Empathy must course through the veins of an organization.

Constant innovation. You innovate or die. Questioning how things are done, challenging the status quo, and challenging each other, should be a perpetual reality of business life.

Meritocratic system. Value creation transcends politics in deciding who gets rewarded. That is both on a company-level, and on a market-level.

Describe what 'partnership' means to you.

Partnership is analogous to a sports team. Individual components with different life experiences and talents come together to reach the same goal. In a partnership that truly harnesses the power of the collective, you are not able to trace some accomplishment to one single person. There is no levelling up from a partnership, you level up together. A partnership is tied together by intrinsic respect towards one another, and inviting diversity of talents. It is a decentralised system of value creation which invites all to be leaders.