Download - VC Evolution: Geeks Got Next
VC Evolu)on: Geeks Got Next. (aka “So(ware Eats Venture Capital”)
@DaveMcClure @500Startups @DigitalOctober Landing Page Event
(Moscow, Sept 2012)
Shit I’m Gonna Talk About Pro Tip: Leave Now B4 This Gets Ugly
• 500 Startups: Dude. Srsly. Like, WTF? • Angel List: Use It, You Fucking Idiot. • Making Venture Work BeJer (This is Easy)
– MoneyBall 4 Startups – Startups #FAIL & VCs #SUCK. – Early Stage InvesRng = Risk ReducRon – Your Diligence Is an Illusion – Guild of Geeks / Mentor Network
• Making Incubators Work BeJer (This is Hard) – It Takes A Village: Mentors, Advisors, Investors – EducaRon & Community – Outlier CompeRRon & Success Behavior Modeling – Product, Market, Revenue, Pitch – Customer AcquisiRon, Growth Hacking, & Pla]orm DistribuRon – Winners Win, Losers Lose, Tweeners Tween
• Scaling VC • Going Intl
Dave McClure Founding Partner & Sith Lord, 500 Startups
00’s & 10’s: • Investor: Founders Fund, Facebook fbFund, 500 Startups • Companies: Mint.com, SlideShare, Twilio, WildFire, SendGrid • Marketing: PayPal, Simply Hired, Mint.com, O’Reilly Media • Speaker: Lean Startup, Web 2.0, Stanford/Facebook
80’s & 90’s: • Entrepreneur: Founder/CEO Aslan Computing (acq’d) • Developer: Windows / SQL DB consultant (Intel, MSFT) • Engineer: Johns Hopkins‘88, BS Eng / Applied Math
500 Startups: SRSLY, WTF? Mountain View, CA – Founded 2010
• Seed Fund & Startup Accelerator – 10,000 sq ft / Silicon Valley HQ – 15 people / 8 investing partners – Design, Distribution, Data – US, Brazil, Mexico, India (+ more) – 600 Founders / 180+ Mentors
• 375+ Portfolio Co’s / 20+ Countries – Wildfire (acq GOOG, $350M) – Twilio – SendGrid – TaskRabbit – MakerBot – 9GAG
Angel List*: It Fucking Rocks. (Use it, You *&#% Idiot)
• Startups & Investors • Ac)vity & Metrics • PlaTorm & APIs
• *ps – it’s not just for Angels, US
Making Venture Capital Work BeJer
This is Actually Pre^y Easy, Since Most VCs / Funds
Suck Balls.
MoneyBall 4 Startups
h^p://slideshare.net/paulsingh/ moneyball-‐a-‐quanRtaRve-‐approach-‐to-‐angel-‐invesRng-‐ausRn-‐tx-‐aug-‐2012
1. Make Lots Of LiJle Bets 2. Count Cards (Monitor Progress & Stats) 3. Double Down on Winners
Startups #FAIL & VCs #SUCK. But You Knew That Already
• Play Blackjack, Not RouleJe. (Count Cards. Make Lots of Li^le Bets.) • Don’t Be An Arrogant, Insufferable Prick. • Don’t Assume Your Diligence is 4 Shit. • Don’t Assume You. or They are Smart. • Build a Fucking Brand That MaJers. • Increase Sample Size. • Don’t Make Big Bets Too Early. • Simplify Revenue Model. (as in: HAVE ONE, you fucking idiot) • Bet on Hackers, Hustlers, Designers. • Create a Community. • Invest afer they have a funcRonal prototype. • Be early and contrarian, or late and right. • Use The Tools (you fucking idiot): Twi^er, Facebook, Quora, Instagram, Pinterest, etc • Talk / Blog / Present about something u know about, care about. • Admit Your Faults Frequently. • Laugh a li^le bit. (at yourself, not others). • Don’t worry too much about legal structure. • Worry a SHIT TON about valua)on. (because your exits will be SMALL)
Bet on Singles, Not HomeRuns. (Look for Ichiros, Not Barry Bonds)
Early-‐Stage Risk Reduc)on
• Intro: Crazy, Liars or crooks? Fucking idiots? • Product: does it work? (crappy, not perfect) • Market: are people using it? (not their mom) • Revenue: will people pay for it? (just a few) • Growth: how will it/they scale? • Finance: what will it cost
– Q1: cost to get a customer? – Q2: how & when do you make money?
Your [up-‐front] Diligence Is An Illusion (Real Diligence = Quick Check + 3-‐6 mo’s)
• You Might Be Able to Detect Idiots & Assholes. • You Probably Can’t Figure Out Winners (Yet). • Your Network is Be^er Than Your Homework.
• Trusted Referrals >> Diligence • FuncRonal Prototype >> Team. • Customers/Revenue >> Market.
• You’ll Be Wrong 4x out of 5x. (If U Don’t Suck). • In 6 Months, You’ll Know If They Don’t Suck. • In 1-‐2 Years, You’ll Know If They’re Awesome.
TIRED: White Guys in Khakis & Blue Shirts. WIRED: Guild of Geeks. Mentors. YC, 500.
Making Incubators Work BeJer
(This is Actually Pre^y HARD.)
Find & Fund PotenRal. Help Them Improve.
Educa)on & Community. Access to Mentors. Access to Investors.
If You’re Lucky, Discover [a few] Winners.
It Takes A Village
• Physical Space. • People = Tribe. • Mentors (Advise 1st, Invest 2nd) • Events, Foods, Awesome. • This is YOUR FAMILY. Make Them AWESOME. • This is also YOUR BRAND. So Don’t SUCK. • Make a Big Tent. (Collaborate, don’t Compete).
EducaRon & Community
• Mentors, Investors • Design, Data, DistribuRon • Pla]orm Partners • Sponsors & Strategics • MarkeRng & Visibility
Outlier CompeRRon + Modeling Success Behaviors
• You want min 3-‐5 “rockstars” to compete • Rockstars to model success for others • You can’t assume >20% rockstars • Therefore, pick 5x5 = 25 teams • 3-‐5 rockstar teams emerge, compete, win • 5-‐10 *other* non-‐rockstars learn • Prune losers quickly
Product, Market, Revenue
• Product: assess funcRonal use, improve design/UX • Market: test usage, distribuRon channels • Revenue: test cust acq cost, revenue, *Rming*
• Work on Pitch, Help Find Co-‐Investors, etc
Hacker, Hustler, Hipster
• Hacker: engineers & developers • Hipster: design & UX • Hustler: markeRng & business
1. Build funcRonal prototypes 2. Improve UX so people convert 3. Scale customer acq & distribuRon
Winners, Losers, Tweeners
• Winners #WIN (with or without you) • Losers #LOSE (with or without you) • Tweeners #TWEEN
– They might win with your help – They might lose with your help – Be helpful, but don’t dally
– Note: you might be wrong about the losers & tweeners, so don’t be a fucking arrogant asshole.
Scaling VC
• VC is an immature & fragmented market • It’s Ripe for DisrupRon • It Hasn’t Scaled (Yet)
Going InternaRonal
• Brazil, Mexico, India • Canada, UK, Japan • China, Indonesia, Russia, Turkey