Knowing What You Are Looking For

There are many different styles of investing. At USV, we choose to be thesis-driven investors. This is our current thesis.

When an opportunity shows up that is right down the middle of our strike zone, we generally jump on it.

It really helps to know what you are looking for.

I told this story yesterday to Rebecca as we were talking about a current opportunity that fits our current thesis like a glove:


When Brad and I were raising the first USV fund in 2003 and 2004, we spent most of our time on the road, pitching investors to invest in our fund.

On the road, we would talk a lot about what we would invest in once the fund was closed.

We wanted to invest in the applications layer of the Internet and we were seeing search and social turning into interesting opportunities.

One day Brad said to me “What if job listings worked like search? Instead of posting your jobs to a site like Monster, you just post them to your company website and buy traffic to them?”

Brad has always been fascinated by business model disruption and the power of moving to a new model.

We thought about it and talked about it a fair bit and concluded that if something that looked like that showed up, we would jump on it.

Right after we held our first closing of USV 2004 (which happened in November 2004), I read this blog post on my friend John Battelle‘s blog.

John was writing his book on Google at the time and was obsessed with the search business.

I ran into Brad’s office and said “your search engine for jobs is here, it is called Indeed.” I showed him John’s post.

So we reached out to Paul and Rony, the Indeed founders, and told them we wanted to invest in Indeed.

They weren’t so sure about that. They were self-funding Indeed after selling their previous company and did not need our money.

But we kept after them and eventually, in the fall of 2005, we did invest.

I wrote this blog post on explaining why we invested in Indeed.

The rest is history. Indeed was possibly the best company we ever invested in at USV.

There have been bigger returns as Indeed chose to sell to Recruit instead of staying independent and going public.

Had they done that, I bet they would be worth north of $10bn now and we owned a lot of it.

But that’s another story.

This one is about knowing what you are looking for and jumping on it when you see it.

It is usually a recipe for success.

#VC & Technology

Comments (Archived):

  1. kenberger

    i like that you went down memory lane today, because I missed sunday’s 15 year AVC bday post and just now added a comment recounting my experience as an AVC Genesis Block member, including giving props to Gotham Gal :)…

    1. fredwilson

      Better late than never!

      1. kenberger

        what a great bartender– lights were off but you showed up and topped me off ! Maybe this is more of a speakeasy…

  2. JimHirshfield

    I’m not sure most people know what they want.

    1. JamesHRH

      Shiiiiiiiiit, Jim – #1 issue in life.

    2. jason wright

      the zeitgeist of the age is that we are constantly being told what we want, by politicians, by media, by brands, by each soft drop a Daniel Barenboim quote – “i don’t listen to it, but i do unfortunately sometimes hear it”.

    3. William Mougayar

      As Yogi says, when you come to a fork…take it 😉

    4. LE

      I’m not sure most people know what they want.They want what they can’t have. Then once they get that they want something else. Or they get depressed because their purpose in life has been gutted.So if they finally get all that they want (and no longer have the drive to go after something) they will then become unhappy. I think that happened to Michael Phelps after he won all of those medals. He had worked his entire life to get to that point. And when he achieved it so many times he no longer understood what he was going after. Something like that.

      1. jason wright

        Phelps and lactic acid recycling. He has a genetic mutation.Trying to be at that level in any other walk of life would be much more difficult. He’s possibly been finding that out.

        1. LE

          Maybe part of the issue is also this. That he lost sight of the fact that entire point of winning medals is almost certainly the fame that goes along with winning medals. And once you have that if you don’t Seinfeld out you may lose that luster. Quit while you are ahead.For example if we form a private group and run a contest and nobody knows about it and therefore we don’t get fame, fortune or endorsements then it doesn’t matter by this thinking. And sure you could argue in a way that he gives hopes and dreams to others (Phelps and the Olympics I mean) but in the end it’s all about some kind of party in your brain (and access to a a better life) that comes by way of winning. Quite frankly some arbitrary contest. In this case swimming. What is the difference between being the fastest swimmer or the fastest person that can run around a (now empty) mall parking lot? The difference is people recognize the former as being important and not the latter. No social proof and status from the win in the parking lot. [1] As I used to say nobody cared that I flew an RC Helicopter and was self taught. But if I was on the track team my Aunt would think that is great. Track is much easier by far and less of a challenge.[1] Although there is a version of this called “Guiness Book of World Records” which is just an arbitrary bunch of fake titles for things that by and large are mini contests (kind of like Ted vs. Ted X) or getting a night school degree at an Ivy League college or taking classes there.

          1. jason wright

            and the second angle is to assess the internal process of those he competed against. they invariable lost. does winning make you stronger in life, or does losing? thinking of Nassim Taleb, is winning fragile and losing antifragile, and i wonder if that’s why winners seem to get into difficulties outside of their winning environment?why do we have a winner construct? what are government elites and media trying to project into our minds?

          2. LE

            Sports more than others things (maybe politics is similar) is a winner take all event. Life in general isn’t like that though.In sports what matters is being the winner or near the top (say top 3 Olympics). In some cases being a loser has value (say you lost to Muhammed Ali in boxing you are still a winner in a way, right?). Of course in sports you also get some cred by simply being in the game ie ‘played for the Yankees’ or ‘played in the Superbowl’. I guess that’s like ‘was in the ring with Ali’.But being that winner depends a great deal on the others playing the game at the same time as you. No way to control that.Contrast that with business. There are a multitude of ways to be a winner and/or have success without even coming close to being at the top.and i wonder if that’s why winners seem to get into difficulties outside of their winning environment?That’s because there is nothing super special about them outside their area of expertise which is what they spend a great deal of their time on. They are just ordinary people. That is why I laugh when I hear some celebrity being taken seriously about what they think about world events, the environment or politics. As if what Bruce Springsteen thinks is any more important than the guy next door who might even be more well read.

          3. PhilipSugar

            I’d disagree. Sales is a winner take all event and nothing happens if you don’t get a sale. Sure you can say you’ll get another shot at the plate. Many times you don’t.2nd place is the first loser.

          4. LE

            Sales actually is typically the ultimate do over. You can get the sale next time from the same person or company and you can get the sale the next day from a different person or company. There is fresh kill every day in the market. [1] Of course this does not apply to all cases of sales or perhaps what you sell. But there isn’t only one buyer even for your product or for that matter for what Boeing builds. Dust off and go after the next sale. But sure perhaps the type of sale that takes years and only results in a signed contract is like an Olympic event. But aren’t most people doing that working on multiple big sales and not just one? Or even big and small sales?Most of selling is not landing Amazon for your city. That is pie in the sky both with the competition and the likelihood of winning the contest.Also not to be forgotten is that what drives many salesman (I know it drives me) is the intermittent reinforcement of winning but not always winning. That is what makes it fun and makes it challenging.How can that be compared in any way to spending your entire life towards winning the rowing event at the Olympics and the only outcome is Gold, Silver, Bronze? Or even applying to a top school and selling yourself there. That is close to winner take all. But it’s worth it because there are multiple winners not just 1 winner. As long as you are accepted you are as good as the next guy that is there.My theory is to always have a percentage of small wins built into selling. Even if they don’t result in big monetary wins they put you in a positive frame of mind which makes it much easier to enjoy and do a good job with the larger sales. I can’t imagine only pursuing the large sale exclusively.[1] Let’s take even hunting something I know ZERO about. If you go out hunting or fishing with your buddies sure you hope to land that deer (a guy worked for me that was a big hunter btw.). But if you don’t you get a 2nd chance to get that trophy rack, right?

          5. PhilipSugar

            I have a good friend. Sells MRI machines for hospitals. We sell systems that average have the same customer length more than 15 years.Depends what you sell.

          6. jason wright

            “fresh kill” – a sweet savage society 🙂

    5. Matt A. Myers

      This is the point of having a practice of intent – refining the understanding of what you want, while practicing and learning how to focus with more clarity.

  3. William Mougayar

    It’s surprising how many investors jump on the next opportunity they see without that initial grounding to guide them.But you need to be directionally right, and be able to recognize that what you see is what you are looking for. Sometimes, it’s not all that obvious from the first sight.

  4. JamesHRH

    What percentage of USV investments were you asking in?

    1. fredwilson

      Most of them. But not all of them

  5. Ludwig

    I think this is what a lot of people misinterpret as ‘luck’. Know what you look for and be prepared to jump in once an opportunity arrives.

  6. LIAD

    Know what you’re looking for, when you find it, go after it boldly.- basically the story of how I got together with my wife.

    1. fredwilson


      1. LE

        Online dating is the greatest thing ever invented for go-getters. I can’t say enough positive things about that. You can literally dial in [1] exactly what you are looking for and what you are attracted to and get people who you would never have access to prior to online dating.[1] I don’t mean that literally or at least the last time I used it (and found someone that I am now married to). I just mean in the way that it allows you to get enough of a general sense of someone and easily get in contact with them and then get a date.

  7. kenberger

    Does USV keep a running spreadsheet of specific ideas you want to see, like the example here, and keep track of target startups and/or ways to hunt for them? I don’t mean broad strokes like “crypto, healthcare, UBI etc”, so please don’t just point me here…, I mean specific ideas you’ve riffed on, exactly like the convo you and Brad had and then you quickly pattern-matched upon seeing Batelle’s post?1 thing I do is, once in a while, I wake up in the morning or during the night (it’s usually NOT in the course of a day) with a Big Idea that I’m sure the world needs. And I then keep my radar open to look for a startup or bigCo that maybe I can help to get there.An example for me is: while watching the last presidential debates, i thought why don’t we have some AI-powered tech that can monitor in real-time a debate line by line, or scan through a printed doc, and give constant scores as to likelihood of trueness? A bullshit meter, or advanced, basically?And then soon after, I saw a friend post something on his FB feed about Factmata, an intriguing smart startup in London.…I cold emailed them, and wound up putting together a small syndicate of Berlin investors last year (including myself, so there’s the disclosure).

    1. Matt Zagaja

      Mostly because once you spend enough time in politics you learn the truth does not matter. People are largely indifferent to it. The data suggests that people mostly vote based on party alignment.

      1. kenberger

        that’s a really important, and disturbing point. We have found that fact is most people feed off of fake news… no one is asking for it, but most people simply readily imbibe it. But it’s still an important problem to solve, bringing certain business models with it.

  8. Pointsandfigures

    Warren Buffet says in investing, you only have to swing when there is a fat pitch right down the middle. You don’t even have to foul a pitch off to stay in the batter’s box. In order to do that, you better know what pitch you are looking for. Seems like Indeed was the fat pitch.

    1. LE

      when there is a fat pitch right down the middleHe is always at bat and gets pitches that others never even see.

  9. PhilipSugar

    Fred is laying out principles. Principles are so much more important than rules. A rule might be we want to look at deals that make 10x. A principle is here is what we are looking for. I got called out for breaking rules yesterday. Here is my response.I don’t believe in rules, I believe in principles.Rules are meant to manage the bottom 20% of people, we manage that by having them not here.Somebody can find a way to break a rule:If it’s stupid like meIf they don’t break it on a technicality, which leads to…more rules.Notice…….many of my statements are principles:Give your best effortHelp your fellow employee to your best abilityOur employees choose us not the other way aroundI give you a place to grow I want to be someplace you were proud to have worked for if you leaveDon’t write checks you can’t cashEmail is not a commitment systemDon’t use the internet excessively other than for work and never access something your mother or my mother would be offended at.Treat money like its yoursDon’t punk anybody that is not playing that game as wellI believe in ground rules, but small minded people use rules……because their minds are small.

    1. LE

      Agree. This is what I would call the ambiguity paradox.In many cases ambiguity is bad. Because it can allow wiggle room. But in more cases rules are even worse. Because rules can and will be gamed or broken sometimes just for fun (and you know this). And you can never define every rule or even close to every exact situation. So then there are protection gaps. “No dinner with other women” does that mean breakfast is ok?That is why I have said (among other reasons) that I don’t personally like what Fred put at the top of the block which is:We do not tolerate racism, sexism, and hate speech of any kind. No spam or token offering promotions are allowed.Because it would be better (by the way I think) to simply say ‘we reserve the right to refuse service for any reason at all’. A very small example is how it says ‘no spam or token offering promotions are allowed’. Does that mean other promotions are allowed? And what is ‘hate speech’? What is ‘racisim and sexism’? All of us do not agree on what the definitions of those are.Why not just have a broad principle in place when you are ‘chief of police’ and don’t have to answer to anyone in particular? ‘Be respectful, don’t promote’.One last thing. By telling people a rule you also tell them something of value. I just had this with a deal I was doing with Facebook (Yes, I am allowed to disclose that fact). I was specifically told not to deal with anyone but the attorney at Facebook by the super high priced attorney for Facebook. That told me that my attempt to contact the product manager was not only successful but was the right strategy. So I doubled down on that. And got the deal done. A big deal. Really big. I even told that to the big shot attorney over the phone. I said something that roughly translated to ‘who do you think you are dealing with some corporate person who is worried that they can loose their job? I can do what I want to do’.What’s funny is if he had simply said the same thing to me in a nice way I might have listened. [1] But the ‘rule’ and the way it was stated said to me ‘break this rule’.[1] Probably not but to make a point I will add this.

      1. PhilipSugar

        People with no power like to hide behind rules like your attorney exampleThat is the only way they can exert power, so it makes sense to strip them of it, and then stomp them down because that is what they are trying to do to you.Also you are right it is fun because many times you have people that think: if I just play by the rules, everything will be just fine. When things don’t go their way it is devastating.People don’t understand this is an inbred American trait. It’s self selected.If you come here from a low caste in India and make a ton of money are you following rules that were set out for you when you were born? (for example)Now you have to have ground rules so there is not chaos.But it’s no different frankly than a dog. Hunting dogs have been bred for years to not be scared of gunshots and to charge and go forward even harder when they feel pain. There is a Chesapeake Retriever that I hunt with that literally looks at me in disgust if I miss. If he could talk he would say WTF. But if I don’t it means he goes into brackish ice water and comes out shivering.There is a politician I won’t name that didn’t follow either parties rules last election. Might have struck a cord with that American trait.

      2. PhilipSugar

        Just got off the phone……I’ll give you another one. We get an RFP. I say I want to at least have a phone call with the decision makers to understand needs better, schedule one.They say the rules are no phone calls.Ok, we aren’t responding.We have to!!!!Nope. That’s an order which is stronger than a rule, that get’s you walked out the door for non-compliance in less than a minute.I told them…….they said ok, they will take a call.

      3. sigmaalgebra

        ForAnd what is ‘hate speech’? What is ‘racisim and sexism’?Recall that the two top cards in the Democrat play book are racism and sexism. For the first, there has been a big push to try to establish that one should be ashamed to be Caucasian; e.g., note the outrage when someone said that there is just justice and not separate White justice and Black justice. For the second, see the big Democrat party emphasis on women, Pelosi, Waters, Fauxcahontas, Feinstein, Harris, Hillary, etc. and in particular the current attacks from women, “He raped me, sometime, somewhere, I’m not sure just when and where, I was drunk at the time, none of my friends remember, I didn’t report it at the time, 30 years ago, …” and, then, “Women must be believed.”. Just why do we have to believe the claims of some women who have no good evidence as they attack Judge Kavanaugh? Because the Democrats are playing the sexism card (Kavanaugh is male and women claiming they were raped) and the racism card (Kavanaugh is Caucasian).NYC is likely 90+% Democrat and totally devoted to their card deck.When in Rome, do as the Romans do.Either fit in or be left out. No good saying “I’d never join a club that would have me as a member.”.So, the statement might be just a public statement of loyalty to the NYC Democrat tribe.

    2. JamesHRH

      Perfectly stated.

      1. PhilipSugar

        You know why I come here…….I had to think more about that. Go back to yesterday and see the thread. I believe in standards and principles.

  10. jason wright

    trusted brands. um, doesn’t blockchain technology promise to render that distinction moot?if we are thinking even further ahead (and i know you always are) isn’t there a fourth iteration down the tracks and just around the bend? trusted networks seems the least compelling part of the thesis going forward.

  11. Dasher

    If you are looking for something, may be it is a bit late already? Would you have been looking for Google, Cisco, VMWare, Facebook, Uber, etc. I bet you can not predict the trulycategory defining companies.

  12. Betty

    Love this one- thank you! Great reminder on the importance of thesis honing.