I sat down with kbs+ Ventures late last year and they produced this interview which I think came out well. This video is part of a series on Creative Entrepreneurship that includes a book on the topic. The book is available for a free pdf download here.
Last October, I skyped into an entrepreneur meetup in Milan and talked for 30 minutes. This was arranged by AVC community member David Semeria.
The main topics were building a tech community outside of the main startup hubs, raising angel and venture capital in a market where there isn't much of that, and the differences between US and european investors.
When I watched this video this morning, the audio and video were out of sync which made it hard for me to watch. I ended up listening more than watching. I hope you all don't have that same problem.
Drawing is one form of creative expression that has not made a rapid transition
to the digital/online world. The tablet may well change that. Paper is
one of the most amazing tablet apps I have seen. It is beautifully made
and the art that people are creating on it is inspiring.
It
seems like there is even more potential that can be unlocked with
drawing. Draw Something showed that everyone can draw something (no pun
intended). But Draw Something is a two person game. It is not massively
multiplayer and social in the way that Twitter, Instagram, and
Foursquare are.
Enter DrawQuest. DrawQuest is the creation of our portfolio company Canvas.
One of the most popular features in the Canvas community is the drawing
challenge. The company regularly sends out a themed challenge and the
community responds to it. That inspired DrawQuest.
DrawQuest is a
tablet app, initially for the iPad only. After signing up, you receive
daily challenges, you draw them, submit, and then you can see what
others have done with the challenge. You can like, play back someone
else's drawing, follow users, etc.
DrawQuest is a game in the
same way that Foursquare is a game. It’s fun and engaging and you get
feedback on your creations. I believe this kind of interaction will lead
more people to draw on their tablet in the same way that Instagram has
led more people to take photos on their camera.
You can download DrawQuest for your iPad here and read more about the app on the company’s blog.
It's no secret that USV invested in Hailo at the end of last year.
What is less well known is why we would do that.
Hailo announced the financing today and also a bunch of impressive hires for their US and Asia operations and they also disclosed a bunch of numbers for the first time.
Hailo is as big in their home city (London) as Uber is in SF and across the ten markets they are in, Hailo has similar scale as Uber in total transactions per day, week, month, and year. Hailo is different than Uber though. They focus exclusively on the regulated part of the market and as a result they can offer lower prices and a higher liquidity of cars to their riders. The power of this model becomes clear if you travel to London and compare the Uber experience to the Hailo experience.
Another big factor in our investment process was the "I told you so". In late 2011 as Hailo was just launching in London, the team came to see us and told us everything they planned to do in 2012. We were impressed by the team, their backgrounds, and their attitude and energy. But we had big concerns about everything they said they were going to do in 2012. A year later, they came back to see us and not only had they done everything they said they were going to do, they actually did a few things more than that. I referenced this story in a post I wrote at the end of last year. Now the company in the story has been named. They will be added to the investments page on usv.com today.
And maybe most importantly, we believe in large networks of users that have the power to transform big markets. We've long thought that the ubiquity of the smartphone will enable transactional networks between buyers and sellers and it turns out the urban transportation market is one of the first big markets that is rapidly being transformed by large smartphone networks. We are excited to be able to invest in one of them.
On February 14th, the entire USV partnership will be in Salt Lake City and so courtesy of our friend Bryce, we are going to do an event called Sessions @ The Leonardo.
We've done this format before, usually in our event space, and its a lot of fun to do a public appearance with all of my partners. We finish each other's sentences, tee up topics for each other, and tell stories together.
It is from 4pm to 6pm on February 14th at The Leonardo. The event is free but space is limited. RSVP here.
We have a two year rotation program at USV for most of our non partner positions. We hire incredibly talented people, suck them into everything we are doing for two years, and then ask them to leave. The USV alumni group is becoming quite a collection of talent.
For much of last year Christina debated what she was going to do at the end of her stint. We made it even harder on her because we flirted with extending her stay. But at the end of year, she packed up her desk and headed out.
And today she explains all of that and what she's been doing since on her blog. I particularly like this part:
Why did I want to do something different? In part, because I wanted something that felt more tangible. But mostly because the story of the internet continues to be the story of our time. I’m pretty sure that if you truly want to follow — or, better still, bend — that story’s arc, you should know how to write code.
I admire Christina's willingness to leave a cushy job and take up the difficult task of teaching herself to code and building something publicly. I am sure it will turn out to have been a brilliant career move in time.
Marc Andreessen says you either will be the person who tells the computer what to do or the person that the computer tells what to do. I see more and more young folks internalizing that dichotomy and deciding to "get technical." And that makes me very happy, and I am particularly happy about and proud of the choice that Christina made.
What do you do when you don't want to sell your company and you don't want to go public either? We've been discussing this issue here at AVC for a long time. I think back to this post from 2008, almost five years ago now, as the kickoff of this long running conversation. This is something I care a lot about because my business model requires getting liquid but I hate the idea that my business model creates problems for the entrepreneurs we back.
Here's a great three minute discussion of this issue between Chad Dickerson, Etsy's CEO, and Sarah Lacy, from last thursday night's PandoMonthly event.
I've been having frequent private conversations about these issues with the CEOs of our portfolio companies and it's great to see some of that become public in venues like the Pando event. This is an important topic, not just for me or for AVC, but for the entire startup ecosystem.
The entire talk between Chad and Sarah is almost two hours and can be seen in its entirety here.
One of the guys who taught me the venture capital business used to say "success is in inverse proportion to the number of VCs you have on your board." He was right. For a few reasons. First of all, most VCs get on your board by virtue of financing rounds you do. If you do a lot of financing rounds, you will collect enough VCs on your board to field a basketball team. And that sucks. And it means you had to raise too much money too. All of which are bad things.
But there is another reason and it became perfectly clear to me on Tuesday when I had back to back board meetings.
The first meeting was almost a celebration. The company had put together a phenomenal year in 2012 and there wasn't much to be concerned about. But the best question asked of management in the entire meeting was asked by an independent director who happens to be a CEO of a company that is five times bigger than our portfolio company. In the midst of the "celebration" he brought everyone back to reality and got folks to think about what we could be doing better. It was a great board moment.
The second meeting was even more interesting. The CEO was seeking advice on some important strategic questions. And this board has two investors and three very experienced operating executives on it. And one of the investors (not me) has deep operating experience. So you had essentially four very experienced operating executives plus me giving the CEO advice. It was a great meeting. I walked out thinking "that is the way a board should be constructed."
If I could construct the perfect Board for the companies I am invested in, it would be the CEO, me, and three CEOs who have built and/or run one or more tech companies of scale. If you have a very experienced VC on your board, you really don't need more of them. But you can never have enough peers on your board who have been where you are before. That is invaluable.
Kickstarter published a retrospective on 2012. It's worth browsing. Here's the lead in
In a comment on the latest tally of VC fundraising, NVCA President Mark Heesen said:
“The venture capital fundraising environment has settled into a ‘new normal’ which is characterized by a barbell structure of larger funds which are stage and industry agnostic on one end, and smaller, early stage, industry or region specific funds on the other.
This is certainly true and has been for a long time. The two successful models seem to be the large megafund and the small early stage fund. It's hard to be anything else in VC.
Entrepreneurs need to understand this. There are a ton of options out there for early stage funding. And if you get to the stage where you need a growth round from a big fund, there are plenty of options for that too. But if you are looking for a Series B round to help you grow from early revenue status to true growth status, you are going to find that challenging.
To put it another way, there are plenty of us who fund hopes and dreams. And plenty of us willing to fund true success. At the stage where you are past hopes and dreams, where you have customers, revenue, and a real business, but have not yet reached "true success", there just aren't many investors to choose from.
The truth is early stage investors are often asked to be the funders of last resort for the "in between" stage. We do that all the time at USV. We will lead or do an inside round for the Series B and Series C rounds if we have to. So choose your early stage investors well. Make sure they are willing to see you through the in between phase if need be. Because they will probably need to.
