Image Alt

Utah Business

How we founded Album VC

How we became investors and founded Album VC

The Founder Series is a monthly column by and about Utah founders and how they got to where they are today. Click here to read past articles in the series.

I’ve been an investor at Album VC since we started in 2014, and while I think the quality of our investments can go toe-to-toe with the best VC firms anywhere―with early investments in startups like Podium, Divvy, Route, Weave, MX, Filevine, Neighbor, Homie, and others―what I’m most proud of is our partnership, which does not fit the standard VC mold.

Album is different in many ways. Our office space has a uniquely open, welcoming feel, and no one has a private office. When founders meet with us for a pitch meeting―something that usually takes place in an intimidating conference room surrounded by junior staffers―we intentionally put founders at ease so the meeting feels more like catching up with an old friend. Where other VC firms are structured with big teams of support staff, Album is simpler: our entire team is made up of just five people, and everyone pulls their weight and is focused on our founders. Where other VCs are usually dominated by guys from Ivy-league schools, two-thirds of Album’s ownership team are proud first or second-generation immigrants and none of us come from wealthy families.

It has been interesting for me to reflect on how three very different people―born in Brazil, Los Angeles, and Salt Lake City―were able to come together to create one of the first and only majority minority-owned VC firms around. I believe that, ultimately, it’s our diversity of backgrounds and experiences―combined with a lot of really hard work and good fortune―that brings us together and helps us succeed. And I believe it’s something that only could’ve happened in Utah.

I was always into venture capital

My story might sound similar to a lot of people in the Utah tech scene; I grew up in a middle-class neighborhood where people were school teachers, mechanics, real estate agents, electricians, and woodworkers. Words like venture capital, entrepreneurship, and board meetings weren’t really in the vocabulary. 

While I did have entrepreneurial tendencies even as a child―I sold candy and treats out of the neighborhood playhouse with my friend next door and canvassed the neighborhood with flyers to pick up lawn mowing accounts through middle school and high school―I never really did it for the sake of entrepreneurship. I just knew I needed to hustle to make some cash. 

The first time the entrepreneurship lightbulb really went off for me was when I was serving a mission for the Church of Jesus Christ of Latter-day Saints. My mission president was a very successful Utah entrepreneur, and as I saw the stories he told and witnessed the kind of person he had become through his business success, I learned the impact entrepreneurship could have on the world.

How we founded Album VC
John Mayfield, Sid Krommenhoek, and Diogo Myrrha

I attended BYU, studied finance, got an MBA,  and eventually got a job doing tech M&A work in the Bay Area. This experience gave me invaluable exposure to everything from startups to major corporations, where I worked on acquisitions for Oracle, Yahoo, Amazon, and HP―including the massive Palm acquisition that completely flopped. 

Living in Menlo Park was an interesting experience. I met brilliant people who had founded multiple companies and worked for years in startups, only to have nothing financially to show for it. I also met people who were relatively new to the game who happened to find the right opportunity and timing and were now effectively retired in their 30s. It was there that I developed a love, appreciation, and respect for entrepreneurs who have enough conviction to put it all on the line to change the world. That experience has shaped the way I view the importance of entrepreneurs and their special place in the world. 

After a few years in Silicon Valley, I joined Cougar Capital―BYUs venture fund―and later another local fund, which gave me my first taste of making investments into tech companies―including Hirevue, Dsco, Nexmo, Goal Zero, Domo, and SmartAsset. While there, I learned of a company out of Provo that was showing a lot of promise: Qualtrics. 

I joined at their Series A round, which was an incredible experience because I got to be part of a company scaling from one product to multi-product, expanding the customer base rapidly with Fortune 500 companies, and from a national to a global company. However, if I’m honest, even when I was there I never imagined Qualtrics growing to what they have become today. That was a lesson to me that a simple premise―in this case, a digital survey― can turn into a large company with the right focus, people, and audacity to keep pushing.

Qualtrics had over 500 employees by the time I left―more than quintuple the headcount from when I started. Still, I believe that the greatest days of the company still lie ahead, evidenced not only by the passion with which founder Ryan Smith continues to pursue growth in the state―like recently buying a majority interest in the Utah Jazz―but in the innovation stemming from others like me who built and grew under the Qualtrics banner. Some of our strongest performing portfolio companies are growing with founders and teams who, like me, trace their professional roots to Qualtrics. That’s a story that’s just beginning, and it’s part of the greater legacy that Ryan brings to our state.

Qualtrics taught me valuable lessons about growing a startup and building a winning team. While at Qualtrics, I kept involved with the startup world, still meeting with various entrepreneurs and it was then that I met Sid Krommenhoek, my eventual partner at Album VC. Initially, I was a bit wary of jumping back into the venture world―especially into a brand new fund that hadn’t yet closed―but Sid and I hit it off and the chance to bring a new vibe and funding option for founders was compelling.

Ultimately, I saw an opportunity to join the founding team and be part of the first institutional seed fund in Utah County. I realized that having the chance to fund the next generation of great startups was worth jumping for. 

Sid Krommenhoek was an entrepreneur

In order to understand what could have lured me away from the startup world and into an unproven venture firm, I need to tell you more about Sid. The first time I met Sid I remember the energy and passion he had for entrepreneurs; it was contagious. He had a way of bringing excitement and life to otherwise ordinary ideas and projects. 

Our ways of doing and thinking were completely complementary―a Yin and Yang sort of relationship. To this day we can get lost for hours together talking about a founder, a company, or anything either of us is consuming by book or podcast. We have a shared interest and drive to win as well as the hustle to get out there and meet new founders just getting their start.   

Sid is a second-generation American who was born in LA to his Mexican mother and Dutch father, who immigrated to the US after World War II. He was raised by a hard-working single mom and tells me he initially felt compelled to follow the traditional doctor-lawyer-engineer path that many second-generation Americans follow. 

That changed when Sid attended a scholarship event for minority high school students one summer. The month-long event took students to businesses bordering Mexico (“maquiladoras”) and showcased something that felt entirely new to him: non-white men and women who had made it as successful CEOs, founders, and entrepreneurs. Being raised in Utah County, which is predominantly white, Sid notes this was the first time he really thought, “Oh, so that’s an option.”

In college, Sid found he had a unique ability to build relationships, work hard, and find creative ways to improve his bottom line financially. For instance, as a student at the University of Utah, he had to maintain high grades to keep his scholarship. He also worked at the Sizzler in Sugarhouse to earn money to pay rent. This setup worked well until he tried out for the U’s basketball team as a walk-on and made it (which, I’ve learned, is a very “Sid” thing to do). Suddenly, Sid was trying to juggle a busy work, sports, and academic schedule that would feel nearly impossible to anyone in his shoes.

Sid wasn’t willing to give anything up, though, so he learned he had to maximize his time at Sizzler in order to make it work. “I’d offer my boss two of my player tickets to the Ute basketball games each weekend,” Sid tells me, “and in exchange, I got the best shifts―Friday and Saturday nights―so I could make the most money in tips.” 

“I think it was soon after that,” Sid says, “that I went on a trip to Vegas with some friends and learned how to play Blackjack. I never gambled much because it was apparent that the house always won. So, a few weeks later I started my own Blackjack ring in my dorm at the U. I’d invite other students who I knew had spare cash to join my table and bet against other students for money.”

With this venture, Sid had found another way to pad his Sizzler earnings. As Sid mentioned, the house always wins, and in this case, he was the house. 

After college and serving a mission for the Church of Jesus Christ of Latter-day Saints, Sid transferred to BYU, where its hard-working, entrepreneurial spirit started to wear off on him. That, combined with the encouragement of a friend and mission companion, is what Sid credits to pulling him into entrepreneurship.

“The thing consistently working in my favor throughout my career is that I’ve had really caring and talented people take an interest in me. It was a mission companion who pulled me into startups. We had some failed attempts, but his will and our friendship ultimately led us to an amazing ride when we co-founded, a web portal for high school kids going to college.” 

Zinch, which sold to in 2011, provided all Sid could have hoped for in a startup. “We made all the mistakes in raising money, launching products, and launching our product abroad”―Sid moved to China to lead international expansion―“but we survived just long enough to attract great investors and exceptional people. Without those team members, we never would have gotten to the outcome we did.” 

The journey continued after acquisition, as Sid and many of his team stayed with Chegg through IPO in 2013.  

Eventually, Sid landed in VC, fueled by both the positive as well as negative interactions over the years with investors. He says too many VCs haven’t operated in startups and that a lack of operating experience limits their perspective in working with founders. 

“Look, we all approach service providers in our own way,” Sid says. “For me, I like a pediatrician who has kids, a university professor who’s worked in the private sector, and a financial advisor who’ll show me their own tax returns. In other words, I want to work with people who have had some experience and success in the very service they are providing me. I view venture capital exactly the same way.” 

Sid says that the network of startups founded in Utah makes up the foundation for his investing; he believes that “only in Utah” could investors and founders encounter such a unique ecosystem for collaboration and innovation. 

“My Zinch cofounder introduced me to what became my first investment, Podium,” Sid explains. “On one hand, it was pure luck; on the other hand, it was a byproduct of the lasting value that being part of a startup brings. Nearly all of my investments, in one way or another, trace back to the people who I was fortunate to build alongside. And all of it, from startup to now venture capital, is a gift that this state gave to me.” 

Sid also had the backing of an impressive mentor-investor while at Zinch. It was Mike Levinthal, a Park City resident who came to Utah a few decades ago following an illustrious career in Silicon Valley, who Sid first called when he started contemplating a move into venture capital. 

“If Mormon boys had Jewish godfathers, that would be Mike to me,” Sid tells me. “Second only to my partners John and Diogo, Mike remains the biggest influence on my career. He represents the best of Utah―whether you were born here or just found it to be home as is the case with Mike, it’s about adding your flavor to the state to make it better for all.”

Diogo Myrrha was a lawyer

Shortly after leaving Qualtrics to help raise our first fund, we wrapped up fundraising with $22 million in commitments. Raising the first fund was difficult and in many ways an experiment, but we were fortunate to have an anchor investor in an international multi-family office who was familiar with Utah. They had enough vision and foresight to see what the future of tech in Utah could become and that commitment got us off the ground.

We invested Fund I into great teams at Degreed, Homie, Lendio, MX, Podium, SaltStack, and Weave. Even though neither of us has a very traditional investor background, I think our hustle and conviction in teams was attractive to startups. I believe what has made us successful is that we always prioritized the human aspect of venture capital, preferring to work with tight-knit teams where the founder was on a mission and accountability was high. 

Within 18 months we had invested everything from our first fund. It was 2016 and there was more capital, more startups, and more investment opportunities than ever. We were proud of the investments we made and hopeful that, in several years, we’d see them grow and mature into profitable companies that would help us continue to invest. The only problem was, we didn’t have any more money to invest.

Because our first investments hadn’t had enough time to mature to show our investors a return on their investment―and few startups can in less than 18 months―raising Fund II was a challenge (and that’s putting it mildly). Sid and I spent months trying to track down any investors we could, whether they were family friends, neighbors, colleagues, or more traditional investors. We took a lot of smaller checks because we didn’t have as many institutional investors on board. It was discouraging and time-consuming, but we kept at it.

About halfway through this fundraise, a stroke of luck, fate, or something in between put me and Sid at an event with an impressive entrepreneur named Diogo Myrrha. Within minutes of talking to him, we recognized he had the work ethic, drive, and determination to succeed that would help us close Fund II and make promising new investments. It didn’t take long for us to offer him a job. 

When I say Diogo has an impressive work ethic, I’m not kidding: when he was just a teenager living in Belo Horizonte, Brazil, he was already learning how to take small business ventures and turn profits―even when his studies were more about Algebra and grammar than entrepreneurship.

Diogo told me that in his early teens he learned a family friend would be coming to visit from the US and he asked her to bring him a Playstation 3. But unlike most kids his age, he didn’t want the gaming system so he could play Grand Theft Auto with his friends; Diogo wasn’t interested in a “dumb toy”―he wanted to sell it so he could have liquidity, even if he didn’t know the term or what it meant. 

Diogo had learned about “turning profits” just 18 months earlier when he had asked this same friend to bring him 100 Nike wristbands. He sold them one-by-one at the door of the local mall for four times the amount. Asking for an expensive gaming system would allow him to put his salesmanship to the test again―this time by selling a higher-ticket item. Unfortunately, he was never able to sell the Playstation 3, someone stole it from him at gunpoint when he met with the buyer outside another local mall. 

As scary as that may sound, Diogo told me he wouldn’t trade the experience. For him, the Nike wristbands and Playstation 3 were just the first in a series of experiences that taught him the importance of prioritizing hard work over convenience.

Virtually anyone who meets Diogo can tell that this attitude has made all the difference in the trajectory of his life. First, it landed him a coveted spot in military school so he could receive the best possible education available to him.

“One day when I was 10 years old, my parents approached me with an interesting idea: attending the Military School,” Diogo told me. “Because public schools in Brazil are notoriously bad, my parents had been sacrificing a lot to pay for me and my sister to attend private school for a good education. The Military School, on the other hand, was free to attend and would offer me the best possible education available in the city. 

“My parents told me that if I was accepted, they would take some of the money they were saving on private school payments and use it to deposit 100 Reals (about $20) per month into an account that would help me get my start in life when the time was right. The challenge was that I’d have to rank in the top 60 students―of the more than three-thousand applying―in a series of two-hour tests in math, Portuguese, geography, and history. I’ve never been one to shy away from a challenge, so I quickly took my parents up on the offer and started studying for the tests.”

And so, at 10 years old, Diogo spent up to six hours per day studying for the tests to qualify for military school―more than most people spend studying for tests even in college―and he aced them. Out of 3,000 students vying for the coveted 60 spots, Diogo ranked 29. He started attending military school and worked hard to stay there while his parents set aside money for him to use later on.

As part of his education, Diogo landed a spot as a foreign exchange student in Sugar City, Idaho, which was the beginning of a long history of this Brazilian kid coming to the US to do something completely out of his comfort zone. He was just 14 at the time, and as you can imagine, transitioning from life in Brazil to life in Idaho was a new kind of challenge for him. He had to learn the language and get acquainted with winter―and chapstick. “In Brazil, I never needed such a thing,” Diogo jokes. “In Idaho, I couldn’t survive without it.” 

“By the time I returned home to Brazil in the early spring, Idaho had changed me,” Diogo says. “I had found an internal confidence that nothing could extinguish. There was a certain swagger associated with living abroad. It was not what I had done, but who I had become that really made all the difference.” 

While in military school, Diogo took a “young researcher” role at the Federal University’s Physics lab where he interned for about 18 months. Model United Nations and other mock-jury simulations became an integral part of his education, teaching him how to approach problems from different angles, find an educated perspective, and the ability to go to bat for one’s convictions. 

Luckily for me and my team at Album, just as Diogo was about to enroll in law school, he was invited by a friend to apply to BYU. He ended up applying and eventually came to Provo in the fall of 2007, about a decade before our paths converged. 

“I had no idea what I was doing,” he says, when speaking of the BYU transition. “The classes I cobbled together for my first semester hardly made sense. From Marketing Management to Econ, these were not classes freshmen should take.”

Whatever his freshman course load, Diogo found a way to work it out. In fact, I think Diogo’s experiences in military school, as a foreign exchange student, and then as a fish-out-of-water at BYU gave him the diligence, tenacity, and confidence he needed to later catch the eye of Utah businessman Warren Osborn―creator of the Blu-ray disc package and prolific entrepreneur―who became a mentor to Diogo. This relationship landed him a role at Osborn’s up-and-coming company Spar (later known as Braven), where he set out to make the world’s best Bluetooth speaker. 

Braven had many challenges, such as the time they shipped 40,000 defective units to a reseller for a special live TV promotion and had to rework every single package just days before going live. But despite the challenges, Braven eventually sold to Incipio in August 2013. Shortly after that, Diogo graduated and started another company that sold within 9 months―which, I can attest to you, is quite impressive for any young founder. 

After years of working with Osborn―who was a prolific investor in his own right―and the added experience of starting and growing companies, time helped Diogo pick up on some of the most important principles of successful investing: dedication, diligence, and “making it work” no matter how the odds seem stacked against you. 

Diogo tells me that this period was “an unrelenting pace that had me consistently scrutinizing markets and opportunities, questioning profitability and potential, and figuring out whether or not to invest.” During that time, he actively participated in successful venture deals such as Workfront, Venafi, Capshare, VidAngel, and Sales Rabbit.

But look, with opportunity comes adversity, and Diogo’s no exception. We all innately want to see someone improve their life situation. But, we can also subconsciously put a ceiling on others’ success when we view it as a threat to our own. For immigrants like Diogo, this seems to play out first as a question of competence and later as a question of familiarity. 

Together we founded Album VC

As Diogo accepted a position with Sid and I, we continued working through the fundraising slog that was Fund II. Looking back at that time, it felt like we were startup founders who needed to prove ourselves: anyone can start a company, but not everyone can make it successful over a long period of time. For us, Fund II was a make-or-break period where we had to really prove ourselves as investors. What you see today at Album is an established partnership; during Fund II, the firm was right in the middle of the seemingly endless work of getting to this partnership, which can bring a venture firm to its knees. As it turns out, not everyone is a fit for VC and really only time-in-seat can teach you this. 

Sometime between closing Fund II and investing it, Diogo, Sid, and I reached a special “groove” that just worked. By some combination of luck, hard work, and a “survival of the fittest” reality that investing comes down to, we realized we had found a special partnership where diversity of thought, background, and experience had created something that could last. 

Students will ask us all the time, “I’m interested in a career in venture capital, what advice do you have for me?” It’s always a hard question to answer with sincerity. Nobody wants to hear “well, the only way you can know is if you start investing and happen to be in, or come to, a healthy partnership that’s both accountable and really good at how they invest.” Nobody wants to hear that but there are ways we can explain what we’ve found in our partnership and this career.

It was during the raising of our second fund and before we formally established the Album partnership that the three of us visited Diogo’s home country, Brazil, to check out some prospective investments. As he showed us through the streets of Rio de Janeiro between appointments, we stumbled upon a game called Frescobol. 

Frescobol is a game of rhythm. Using just a ball and two wooden rackets, the object is simple: keep the ball in play as long as possible by hitting the ball back and forth in the air with your partner. Nobody wins or loses in Frescobol―the point is to, by finding a shared rhythm, work with your partner to progressively hit the ball with more precision and velocity until you’ve found your flow. 

At Album, Frescobol has come to represent the way we view our partnership―one that begins with the three of us. We’re all quite different from one another in life experience, perspective, and even in our approach to the founders we back. But we’re convinced that venture capital is a game of partnerships―venture partnerships and founder partnerships―and one that is a long game that isn’t defined by one interaction or investment, but rather performance and rhythm over time. Said another way, Album VC has become a front for Sid, Diogo, and I to get to work together. 

As I reflect on our individual stories and how we’ve built our business, it’s clear to me that no founder, startup, or investor needs to fit a certain “mold” in order to be successful. 

Many in our industry grew up knowing they wanted to be in private equity or went to Harvard or Stanford; we did not. And while some other partnerships are a continuation of long-term relationships from their early careers, ours is not―this is the first time any of us had worked together. And while most VCs follow a progressive, predictable cadence, ours does not: our partnership resulted very much in a meritocratic, organic way where those who find the best companies emerge. 

In fact, the one thing that really makes sense to us is only evident now that we have some hindsight; the three of us coming together isn’t a story any of us could have crafted or predicted. It was almost a Darwinian outcome that is market-tested and built to last. All of us share a hustle and are talented on our own. But together, we’ve stumbled into something special. Individually we’re each very different in our approaches, temperaments, and strengths. 

While our firm still has room to grow, we’re proud of how we’ve defied odds in the VC world. While many firms take years―perhaps decades―to find their first “unicorn,” Album has already made early investments in six companies worth over $1 billion and will be around for decades to come; where most VC firms rely on dozens of junior staffers to source and diligence deals, Album’s team of five stands out; and while across the US only three percent of partners at VC firms are Hispanic, for Album they constitute a majority. 
“At Album, we want to give people a chance to be something they haven’t seen before,” Diogo says. “Our mentors have shown us the ropes and put us in the position we are in today, and we want to do the same for other trailblazers in Utah and beyond.”

John Mayfield is an early stage investor at Album with investments in Route, Neighbor, Filevine, Podium, Divvy, Weave, Qwick, Taxbit and Homie, as well as a board member with the Rocky Mountain Venture Capital Association. Prior to Album, John was an early employee at Qualtrics and pre-IPO Instructure where he worked in sales, marketing, and new product launches. In his early career he spent several years in Silicon Valley working on M&A valuations for top software companies such as Oracle, HP, Yahoo, Cisco, and Amazon.