Driving Alpha: Recycling relationships with Matthew Greenfield

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Matthew GreenfieldMatthew Greenfield is a Managing Partner at Rethink Education, a venture capital firm dedicated to innovative educational technology. He holds multiple board seats, including at SNHU and BrightBytes, and has co-founded several successful technology companies, such as near-unicorn Rethink First. An accomplished educator and thought leader with a BA, MA, and PhD from Yale, he is former professor at Bowdoin College and the City University of New York.

Here’s a glimpse of what you’ll learn:

  • [1:57] How familial influences shaped Matthew Greenfield’s passion and direction in venture capital
  • [2:30] The impact of female venture partners in Matt’s father’s VC journey
  • [6:04] How Matt leveraged his background for Rethink Education’s mission
  • [6:42] The importance of relationship-building for venture capital investments
  • [9:27] Matt illustrates the power of strategic advice and networking through Rethink First’s success story
  • [11:08] The key to being a successful VC: recycling people
  • [16:50] How to be a good giver without letting it overwhelm you
  • [18:45] Adapting an open-minded, unbiased approach to discovering innovation
  • [23:37] The intersection of product-market fit, addressing genuine human needs, and venture capital success

In this episode…

In the fast-paced world of startups and funding, maintaining and rejuvenating relationships can be as valuable as the capital itself. This cyclical nature of relationships helps VCs stay connected with past successes and ensures they remain relevant in an ever-evolving market. How can you leverage relationships in the venture capital ecosystem to achieve outsized investment returns?

Matthew Greenfield, an ex-professor turned venture capital partner, shares how strategic relationships, mentorship, and candid guidance have shaped his approach to nurturing successful enterprises. Highlighting the importance of targeting real human problems for venture growth, Matt emphasizes assisting aspiring technologists and executives while being open to innovation from unexpected sources. Whether reconnecting with a successful founder for a new project or leveraging an old network to discover the next big idea, recycling relationships is a powerful tool for long-term success in the venture capital landscape. Matt’s reflections underscore the power of embracing innovation from all corners and honest feedback’s transformative impact on founders and investors alike.

In this episode of the Driving Alpha Podcast, Brian Smiga chats with Matthew Greenfield, Managing Partner at Rethink Education, about shaping the future of education and venture success. Matt dives into his transition from academia to venture capital, the importance of building a diverse network of investors, and how to strengthen trust through constructive feedback to entrepreneurs. He also explores the concept of “thrifty recycling” and the benefits of CRMs for tracking and nurturing connections.

Resources mentioned in this episode

Quotable Moments:

  • “You just don’t know who that disguised angel or king is, so you should be generous and kind wherever you can be with everyone.”
  • “My firm has unusually strict social impact criteria. We won’t back a company that just serves primarily the affluent.”
  • “I do not get my ideas sitting by myself; I get my ideas sitting at a table or on a Zoom call and talking to people.”
  • “The biggest cause of death for early-stage startups is failure to find product-market fit, which you could also think of as failure to find an actual problem that involves human suffering.”
  • “One of the secrets to being a successful venture capitalist is thrifty recycling of people.”

Venture Tips from Matthew Greenfield:

  1. Build genuine relationships across various sectors, not just with high-profile individuals: This inclusiveness fosters a diverse network that can yield unexpected opportunities and innovations.
  2. Leverage your unique background to identify niche opportunities that others might overlook: This opens up new avenues for venture success and social impact.
  3. Focus on solving real problems for underserved populations to achieve both impact and financial returns: Aligning with genuine human needs can lead to stronger product-market fit.
  4. Be generous with your time, particularly with up-and-coming entrepreneurs and those seeking guidance: Cultivating a culture of mentorship can pay dividends in the long term.
  5. Provide honest feedback to entrepreneurs, even when it’s challenging: This helps clarify their path and builds trust, leading to better outcomes for everyone involved.

Episode Host: Alpha Partners

This episode is brought to you by Alpha Partners, an NYC-based growth equity firm managing $300 million.

Alpha co-invests in top-tier growth equity companies led by the world’s best investors. We focus on scaling and late-stage tech investment opportunities primarily in the essential technology sector, including e-commerce, enterprise software, fintech, edtech, and health IT.

To learn how we can help you with your funding goals, visit www.alphapartners.com, or email us at vc@alphapartners.com.

Sponsor Host: Affinity

Affinity is a relationship intelligence platform that empowers dealmakers in relationship-driven industries to find, manage, and close more deals. With the most automated relationship intelligence insights and technology, Affinity enables leaders to drive deals and ensure their teams can take action with confidence, knowing the context and history of every relationship.

The Affinity platform, including Affinity CRM, is used by over 3,000 relationship-driven organizations worldwide. Founded in 2014, Affinity is headquartered in San Francisco and backed by leading investors, including Menlo Ventures, Advance Venture Partners, 8VC, and MassMutual Ventures.

Learn more at affinity.co/drivingalpha.

Episode Transcript

Intro 0:00

Welcome to Driving Alpha, where we feature our friends, the outperforming investors, who demonstrate their past to Driving Alpha or outsized investment returns. We’re Alpha Partners, where we partner with 1,000 early-stage venture firms as their opportunity capital to invest in their best companies. Driving Alpha is supported by Affinity, provider of the CRM for the private capital relationship economy. Affinity knows who has the best relationship with the right startup. Affinity knows. Learn more at affinity.co/drivingalpha.

Brian Smiga 0:43

This is Brian Smiga. I’m the co-founding partner at Alpha Partners, and this is our Driving Alpha podcast, powered by Affinity, the VC’s relationship intelligence CRM, can’t live without it. Now, today, we’re talking with my good friend Matt Greenfield about how relationships drive venture returns, how they’re essential. And Matt is the co-founding and managing partner of rethink education and impact education fund, which is part of a larger rethink capital platform in impact, venture and real estate, a $3 billion fund founded in 1981. Welcome, Matt. So Matt, we were talking a little bit before that we started that relationships maybe don’t get all the full credit they need in venture, if we start with your story of shifting from being at first a professor, then an entrepreneur, a successful one, and then a venture capital partner and founder, what was the key relationship and the origin story of Rethink Education itself?

Matthew Greenfield 1:57

So a lot of it really comes back to my relationships with my mother and my father. My mother was a high school English teacher who worked for a while at a high school in Brooklyn that served kids from low income families, and she tried to develop specialized curricular materials for them. My father was an IBM employee for 13 years and then became one of the early venture capitalists, starting in 1970 and he was a co-founder of Oak Investment Partners, which survives today is Annie Huntress Lamont Oak, healthcare, fintech. She’s a phenomenal investor, and I’m just going to tell you a few things about my father that really had a deep influence on me. First in the 1980s there was one point at which oak employed half of the female partners in the National Venture Capital Association. Wow, which was three and basically my father and his co founder at glassmeyer didn’t know that they weren’t supposed to hire a woman until certain people, like a certain Sequoia partner and others told them that they were making a huge mistake, but they went ahead and did it anyway, and all three of those women were spectacularly successful in different ways. Second, after my father started to make a little bit of money, he became very passionate about conservation. Initially, he was giving money to buy land in our home area, Fairfield County, Connecticut. And then one day, he had an epiphany, and this is described in the New York Times article in 1989 where they interviewed him. He realized, for the price of a parking lot in Fairfield County, he could preserve 100 square miles of rainforest, Amazon Basin. And so he started partnering with the Nature Conservancy to work with local organizations to purchase land and then to protect it. And it wasn’t enough to buy the land, they had to, in many cases, change the local economy away from poaching and logging, create new skills. And the second thing was his deep thinking about social impact, or environmental impact criteria, which I think still seems noteworthy and advanced. We hear a lot of talk about tons of carbon emitted. He had two criteria, one of which was tons of biomass preserved per dollar, and the other of which was species preserved. Per dollar. And so one of his largest projects was a preserve in Bolivia, where there is a tall waterfall named after my mother’s late sister, Susanna, and where there are 584 different species of birds, which is almost as many different species of birds as you find in the entire continental United States. So it was high impact money, from the standpoint of pounds of biomass conserved, but also from the standpoint of species preservation. And so I’ve been thinking about what the right impact metrics for education are to the best of my ability, for quite a long time. So those my mother and father were deep formative influences.

Brian Smiga 6:04

I understand you saw that leverage that your father researched, and you’re trying to, and I have been developing theses in the EdTech space about similar levers, if you will, and that’s that’s really exciting. So I’m hoping you’re going to share some of those you’ve been at this for a while. I asked you to think about maybe one of your top performing companies, and how relationships played into the discovery as they always do, the diligence and the winning of that deal.

Matthew Greenfield 6:42

Can you share that? Yeah. So while I was still a college professor, I met an autism specialist with a PhD from Columbia, and I met her through my wife who was working with this specialist husband, who was trying to be a Hollywood producer, and she came to me because she was trying to sell a new professional development curriculum that taught people how to deliver behavioral therapy to children with autism and other special needs. And her idea was that you could democratize access to behavioral therapy, that you didn’t need a specialist with a degree in psychology and a specialized certification, you just needed to coach people through it step by step. And what she was trying to sell was essentially a large stack of paper, and she was trying to sell it to hospitals. And I said, I think you actually should maybe try to sell this to school districts, and I think it should be a software product. And she said, how would that work? So I wrote a business plan, and I had left a lot of my business relationships behind from my first business career. And so I went. I thought about trying to run this company, and decided I was too disorganized and introverted. And so I went looking for a CEO after I wrote the business plan, and the place I looked was the preschool that my oldest child was attending, and I came pretty close with one parent who was an entrepreneur, but then I found two others who really got the idea and took a grip on it. I co-founded the company with them, gave them their first financial commitment. That company was acquired by a PE firm in 2020 but has continued growing quite nicely. Today had well, they finished last year with over $110 million in recurring revenue, and are quite unusually profitable for a growing SaaS business. So they’re not yet a unicorn in today’s valuation environment, but they will be within 18 to 20 months. And so this was a set of fairly random connections that led to the creation of this company, but I was just sharing my enthusiasm for this idea with quite a lot of people.

Brian Smiga 9:27

So you were spreading the word with lots of people. And then this company showed up with its full stack of papers trying to sell the hospital and health systems, and you helped mentor them in two directions, turn that paper into software and sell the school districts. And it turned out you were right, and that’s a really wonderful story. You’ve mentored many people, and you’ve talked about your father and mother as a mentor to you. How did you mentor this company down the road? And what. Are key relationships, introductions customers or turning points in let’s name the company, of course, and the journey of this company that got it to profitability.

Matthew Greenfield 10:14

The company is called rethink first, and honestly, I cannot claim a lot of responsibility for their success after the foundation moment, there are definitely other companies where I have come up with names for products, have recruited key executives, including a couple of CEOs, where I have found a buyer for a company, or helped get a buyer across the finish line. So relationships matter for all of those things. I think they also just matter a lot for the generation of new ideas, right? I do not get my ideas sitting by myself, right? I get my ideas sitting at a table or on a Zoom call and talking to people, right?

Brian Smiga 11:08

So relationships and conversations spark ideas that often neither party at the table had. And I think this is what we see is so exciting about the TED conference. This is partly what’s so exciting about venture and meeting with people smarter than ourselves who are deeply passionate and deeply expert in different fields. As you see the turnover of the many folks you have mentored at your firm and in your companies, do you see resonance going forward, where some of those mentees are helping other ed tech companies or doing new things that are exciting in the venture space.

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