Venture Investing


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 »


#TBT: Whatever happened to… B2B Marketplaces

When the bubble began to really inflate in 1998-1999, an excess of venture capital and would-be entrepreneurs latched on to Business to Business (B2B) commerce as the next wave.  Until then, the web was mostly a consumer phenomenon.  A raft of money and energy poured in to every nook and cranny it could find.  The race was on.  Venture funds were built just to address this market segment (CMGI and ICG, to name two.)  Then, those venture funds went public — you heard me right, the VCs went public and got a revenue multiple on the revenue multiple they paid for the underlying companies.  The higher the price they paid, the more they were valued. The double-order-of-magnitude-idiot-arbitrage, I call it.

OK, I can’t resist this digression, but to those who think we are in a 1999-style bubble today, I … Read More »


The Power of Preference

Uber is getting a lot of attention for the eye-popping price of their lastest financing round ($17B, in case you missed it).  It’s amazing to me how many people criticize that it can’t possibly be worth that, while others insist the price is surely too low.  Benedict Evans said it well:  “It’s hard enough to value a fast-growing company in an entirely new market when you have all the numbers. When you have nothing it’s idiotic.”

In this case, the number is so large that you might learn something from a rough, top-down approach, and I enjoyed this post by Aswath Damodaran on FiveThirtyEight trying to size the opportunity from the top down, and I thought he took a pretty good stab at it.  The HackerNews commenters don’t necessarily agree, primarily with his … Read More »


Are Great Entrepreneurs Crazy?

 

 I’ve been thinking a lot about this exchange between two successful investors that popped up in my Twitter feed last week.

To make money as an investor, must you back unreasonable, mercurial, irrational entrepreneurs? This feels on the surface like it has a grain of truth to it. And both these guys have generated spectacular returns in their investment portfolios, so they should know what they are talking about.

Chris is most notable for betting big on Twitter, by acquiring a ton of common stock from employees and former employees, both for himself and on behalf of other investors. I don’t know Ev, Jack or Biz well, so I can’t personally grade them, but given that is Chris’ primary investment, he is likely referring to that. And if you’ve read Hatching Twitter, the … Read More »


The Perfect Valentine

I’ve found the perfect Valentine’s gift for that geek girl in your life.  Actually, it works fine for non-geeks but given that you are reading my blog, I’m pretty sure your wife or girlfriends is somewhat of a geek.

That gift is a subscription to RocksBox.  It’s an affordable subscription to great jewelry — have something new, fresh and beautiful to wear every day, all for less than $20/month.  Not cheap plastic stuff, but real high quality pieces, generally $100+ pieces with a lot of style.

On behalf of Matrix Partners, I have just led the company’s most recent round of funding, and I couldn’t be more delighted.  When I met the founder Meaghan Rose the first time, I was very impressed, but early stage commerce ideas are hard to evaluate in advance of market data … Read More »


Quora Elevates the Web

Quora just announced its Series B fundraising, and I’m pleased to be a part of it, as Matrix is one of the large investors in the round.

I’m a huge fan and avid user of the site, and I think it has the potential to be one of the cornerstone web properties, and help make the world a better place.

I’ve spent a ton of time in this shared knowledge category on the web over the last 8 years.  In 2003, when I was looking to start my next business, I came onto this idea of community shared knowledge.  In the post-bubble era, no one was investing in content for the web because there was no economic model to support it, but by 2003-04 a number of things were happening.  Wikipedia was … Read More »


A Disconcerting Lack of Hubris

I agree with everything in @jasonfreedman’s outstanding blog post about raising seed capital in today’s environment.  I urge all seed stage entrepreneurs to give it a thorough read.

As Jason says, no investor should begrudge entrepreneurs for a strong fundraise in an attractive early stage financing market — but keep some perspective, this is a long game, and you can’t win it today at your seed stage financing.

I wasn’t able to make the YCombinator demo day this time due to a board meeting.  But For context of what I’m talking about, let me anonymize and share a representative email exchange from the previous demo day:

On Wed, Aug 24, 2011 at 1:24 PM, Josh Hannah <jhannah@matrixpartners.com> wrote:

Impressive presentation and interesting business.  Would love to learn
more, if you’d be up for a meeting?

Josh

Hey Josh,

We’d definitely love to talk!  We’ll look … Read More »




From the Blog

The Fax Machine Died When I Wasn’t Looking

Of course, I’ve known the fax machine’s days were numbered for a while now. The fact of it’s death...

An Ad-Blocking Compromise

The debate over ad-blocking, spurred by the OS-level support for ad blockers in iOS9, has the feel of a religious war to me. People...