S 01 Ep 16 | Cracking the Code: Achieving Product-Market Fit with Customer Centric Solutions

With Kevin Mahaffey, the Founder of Lookout & Investor in 9 unicorns

As a successful angel investor, Kevin also helps others build durable companies. Ten of the startups in his portfolio grew their private-market valuations to $1 billion or higher, including the workplace data-management startup People.ai, which hit its unicorn milestone in August.

Key Takeaways

(00:00–09:23) Founding Lookout

(09:23–16:19) Windows Mobile to Android

(16:19–23:24) Transition into Investing and Personal Growth

(23:24–29:54) Venture Investing with Luck and Gratitude

(29:54–42:25) Venture Capital and AI Characteristics

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From Zero
to Unicorns

In this episode, Kevin Mahaffey—founder of Lookout, investor in RELAYTO, and early backer of ten unicorns—shares his journey from cybersecurity pioneer to top venture capitalist. He discusses founding Lookout in the early days of mobile threats, transitioning from engineering to executive leadership, and the philosophies that guide his investing. The conversation covers startup resilience, emotional intelligence, risk in venture capital, and how AI is reshaping business models.

1. Founding Lookout

Kevin Mahaffey, founder, CTO, and board member of Lookout, investor in RELAYTO, and over 100 seed and pre-seed companies, ten of which are now unicorns, talked about the founding story behind Lookout. He discussed how mobile phones were becoming hackable when they first connected to computers and how difficult it was to patch them. He and his co-founders attempted to raise awareness of these security issues by hacking the red carpet at the Oscars. He also emphasized the importance of having a passion for the problem you're solving when founding a startup and enjoying the journey.

The purest form of founding a company is taking a giant problem and saying let's go fix it, as opposed to saying, hey, how do we make a bunch of money, which oftentimes leads you to things you're either, as an entrepreneur, not that passionate about, or that you're one of many people doing the exact same thing. Because, honestly, as you all know, you know, running a startup is getting punched in the face every day. It's really hard. First everyone thinks you're stupid, then they try to kill you, right. And then maybe, like 10 years later, they might think you're successful, right.
— Kevin Mahaffey

2. Windows Mobile to Android

Kevin shares his insights on how to build a great customer experience. The speakers discuss the importance of utilizing both rational and emotional factors to create a memorable experience and how to create trust while avoiding fear tactics. Kevin also talks about the evolution of Lookout as they moved from a consumer-focused product to a business solution that protects mid-market and small businesses.

So, I tend to look at experience in multiple dimensions. You know, one would be rational or utilitarian, like what does it actually do. The other is emotional or aesthetic right, you know how does it feels, and I think you have to manage both of them in like complex customer environment.
— Kevin Mahaffey

3. Transition Into Investing and Personal Growth

Kevin Mahaffey talks about his transition from a hacker to an executive in the cybersecurity and venture capital industry. He reflects on how he has developed both technically and interpersonally, and how his experience in both fields has allowed him to be successful as an investor. He shares insights on the importance of understanding human psychology and the cognitive biases that can help inform decision-making. Kevin also talks about his transition into the venture capital world and the recipe for his success as a top ten early-stage investor with ten unicorns.

If you think about the senior engineers, the development areas are on human interaction, soft skills, because there's a limit to just simply knowing technology deeper. It is, of course, a necessary but not sufficient, and if you think about technology extremely well, you can be extremely effective, but if you can also interact with others and teach, you know folks that are less experienced and more junior folks and have an impact beyond yourself, and that was the thing that I really learned. There's limit how much I can do personally.
— Kevin Mahaffey

4. Venture Investing with Luck and Gratitude

Kevin Mahaffey shares his journey to becoming a venture capitalist. He reflects on the combination of luck, hard work, and preparation needed to make the most of opportunity. He also attributes his success to believing you can make mistakes and still succeed, and to the generosity of others who shared their success with him. His investments began as a way to give back, and he discovered what makes him happy by combining engineering and helping people build. Lastly, Kevin encourages investors to show up and help, be ethical and moral, to find success in the venture capital industry.

The thing I've learned in venture is that there's a thousand ways to do it right and there's no one right answer or wrong answer. The question is what's authentic to you that you can do for multiple decades? Because the thing about venture is, I think it does take decades both to see returns but also to like, get good. And so, if it's not something, if it's a, hey, I want to get rich and I want to invest in some unicorn. Like it's probably not going to happen.
— Kevin Mahaffey

5. Venture Capital and AI Characteristics

Kevin Mahaffey's experience in the venture capital industry has shaped his approach to investing. The importance of underwriting risk, understanding the customer, and assessing product market fit in venture capital investments is discussed. The concept of scalability and how it can help determine when a company is ready to go public is also explored. Kevin offers his insights on how to distinguish the real deals from the hoopla of AI.

My view is that AI allows companies to either serve their customers better by allowing new features previously unthought of, or increase their margins with the same service, or reduce their costs, preserving their margins. Right, and there's different reasons why companies might want to do one or the other, but at the end of the day, it's all business principles, like it just comes back.
— Kevin Mahaffey

Check the episode's Transcript (AI-generated) HERE.