Uncategorized


Dilution vs. Death

Thanks Laff4K for CC-A photo

I was chatting with a talented and smart founder/CEO in our portfolio about the Series B funding round he is going out to raise for the company, and the subject of dilution came up.

We had a conversation I have had many times: how much money to raise, and at what price. Specifically, he was sensitive to the amount of dilution he would take in the next round of funding. He owns approximately 20% of the company now and thinks things are going well. Ideally the company might raise more money at a $150M valuation, but if the market won’t support that, and offers came at say $100M, his inclination would be to raise a small amount of money and make more progress and go out later to … Read More »


“A book with a couple of legs sticking out.”

Also published on Medium.

I realized in 2013 that I had stopped reading books.

It wasn’t intentional —things got in the way, like life, learning how to do venture capital, three kids under 8 years old, the Warriors improbably beginning to figuring out how to play professional basketball. Dumb reasons for not doing something so important.

I was at a dinner event and Tim Ferriss asked: “What book do you give the most as a gift?” — and I really had no answer to this question. Not only because I am a bad person who doesn’t give books as a gift, but actually because I wasn’t making time to read books. Naval Ravikant (our host) suggested The Secret Race, Tyler Hamilton’s absolutely fascinating account … Read More »


A Startup CEO’s Guide to Burn Rates and Vaporization

 

The alarm has sounded.  A three-alarm fire, with alarms named Bill, Fred and Marc.  Burn rates are too high, change course or risk the consequences.

A CEO might be forgiven for asking: “that advice might have been more helpful before I hired those extra hundred engineers, and leased the fancy SOMA exposed-brick office to house them in.  Changing course on burn-rate now will be a lot harder than it would have been a year ago.”

To which I would say: suck it up and go run your business.  The past is past, and the decision you need to be focused on as the CEO is:  what should I do now?  The board is not running your business, they merely advise you, and you are ultimately responsible for making the correct decisions.

The question remains:  What should I do now?

 

The Past is History, … Read More »


Winning Slowly

Marc’s tweet today was timely, as this is an issue I have thought a lot about through my career (both entrepreneurial and investing.

Silicon Valley has embraced the idea of early testing and market feedback wholeheartedly, and ushered in a much more capital efficient era of startup building.  It used to take $10M+ to get a website off the ground, now it is generally live before the first outside capital comes in.  While this speaks volumes about the state of programming tools, cloud services, and other catalysts to development, it also speaks to the ethos of getting a “minimum viable product” live and in consumers hands.  Once out in the world, best practices of the lean startup encourage you to analyze the metrics and iterate on the product based on what you learn.  Startup construction has moved from … Read More »


#TBT – What Series A Fundraising Looked Like in 1999

Times have changed pretty dramatically since I started my first business in 1999, and I thought for throwback Thursday it would be interesting to share with the young’uns what Series A fundraising looked like back in 1999.

My business was then called InsightMarket, as a placeholder, and we thought we would call it WannaBet. We eventually launched as Flutter.com and it became Betfair when we merged with our biggest competitor.

I think our financing was extremely typical of the era — but how does the Series A process of 2014 compare with fifteen years ago?

Take a look through this fundraising deck and marvel at how risky a Series A investment was in 1999 – how little we knew about the product, the customer, acquisition, product-market fit.  This 14 page deck was the entire fundraising pitch — there was nothing else, no model, … Read More »


Foreign Exchange

As a bunch of you asked for it, my recent discovery on moving large ($10K+)  chunks of money from British Pounds or Euros to Dollars (and back).  (For smaller amounts, I’m told PayPal works well but I haven’t tried it.)

Here’s the challenge I have had:  if I want to move it from a bank in the UK to a bank in the USA, I have to go through a complicated process to initiate the movement – often requiring me to be in the country where the money is, which is rarely where I am.  So I am in the bank’s office in London, or on the phone with them at 3am, and go through an hour of bureacracy (ID checks, paperwork, waiting) until the money is ready to be wired.  Then, they call their exchange desks … Read More »


Where Insights Come From

I’ve always learned by doing things. Trial-and-error may not be the best way to learn a known answer, but when you’re inventing (as entrepreneurs must do), you gain insights as you go and change the plan accordingly. One of the tough challenges in moving from entrepreneurship to VC is that my actual operating and market experience decays over time. You get a lot of new knowledge from seeing hundreds of presentations from entrepreneurs, and to some extent from the investments you have made, but you don’t accrue a lot of experience from hands-on activity. And there is no pivot in VC: I have to commit upfront to an investment, and back that entrepreneur come what may.

Nevertheless, I think you can learn from experimentation in this job. So I’m going to deliberately … Read More »


When will Craigslist be disrupted?

Craiglist has been disrupted, it’s just not obvious yet. And the world will be a better place for it.

Craigslist has fewer unique visitors today than it did at this time in 2009.

Bad sites with network effects show much slower decay in use than they should based on their absolute quality. (think eBay.) Bad sites who price most of their product at free show incredibly slow decay in use. (think Craigslist). But make no mistake, it is happening.

The evidence of their poor quality is so obvious it’s hardly worth stating. Suffice it to say, if I’m looking to rent an apartment, it would be nice not to see the same listing reposted every day, and having to re-read it and figure out if I’ve called them before. It might be even nicer to view them on a … Read More »


Do investors ever invest in a pre-revenue and pre-product company?

All the time!

Historically (i.e. before ~2006) this was the explicit role of angel investors in the startup financing ecosystem. Rarely, in fact, would angel investors have an opportunity to invest after a product and revenue were in place.

For consumer internet and SaaS enterprise deals, a lot has changed in the last few years. Technology has moved on, and for a host of reasons a lot more can be accomplished with 1-2 engineers and little or no cash. Now angel investors expect to see product and customers before writing a check, and to an extent, founders expect to own more of the company after that first money comes in. Everybody wins.

As a general rule today, angel investors are expecting to see a product, and customers (or at least users) in place before they invest.

However, there is still a role for angel … Read More »


Life threatening software bugs?

I thought the internet panic over the new TSA pat-downs and body images was a bit of an overreaction. It turns out that the pat-down may be much better than the alternative, going through the back scatter imaging system. It seems the science is very untested on the risks of this system, and those risks could be quite real.

Check out this letter from concerned scientists to the government urging more testing.

Some key points they make:
– people compare the level of radiation to exposure in a chest x-ray or cosmic rays. But this is a totally different radiation. By design it doesn’t penetrate the skin — so while a chest x-ray just flies through you, this all just stops in the skin.
– all the analysis compares … Read More »




From the Blog

Dilution vs. Death

Thanks Laff4K for CC-A photo

I was chatting with a talented and smart founder/CEO in our portfolio about...

“A book with a couple of legs sticking out.”
Also published on Medium.

I realized in 2013 that I had stopped reading books.

It wasn’t intentional —things got in...

Questions about the Apple Car and a Controversial Approach

 

 

Like the vast majority of people who like nice things, I love Apple products for their great design.  I am a car guy generally, and...