Questions Worth Asking

That number. I hadn’t seen that number pop up on my phone in years. 12 years to be exact.  I’ve thought a lot about the conversation I had the last time that number popped up on my phone. I can still remember where I was standing, the time of day and the way the air felt on my skin as I sat on the stoop in front of my house as I answered that call. It was the fall of 2005 and we were in the final stretches of closing our first fund. Earlier that year, we’d talked to Freada Klein and Mitch Kapor about investing in the fund. Seed investing was still a new concept, but they both have a nose for what’s next and they seemed intrigued. We’d connected on a number of levels and it was looking good that they would commit. Prior to making the Continue reading "Questions Worth Asking"

OATV and Indie.vc

Around this time last year, Christopher Mims at the Wall Street Journal did a profile on the experiment we were running with Indie.vc. Buried in the piece was a mention of a new fund we’d closed to continue iterating on the experiment. 

That’s the only mention of the new fund. 

In the proceeding months since his piece, it has become clear to me that there’s still some confusion around the relationship between OATV and Indie.vc. Tho I’ve shared the relationship between the two in private emails and conversations, I think it’s worthwhile to unpack it a bit more publicly so we can remove any confusion about the current state of both. 

OATV (O'Reilly AlphaTech Ventures) was founded in 2005 by myself, Mark Jacobsen and Tim O'Reilly. We were one of a handful of “institutional” super angel/micro VC/seed funds, which is to say that we raised Continue reading "OATV and Indie.vc"

OATV and Indie.vc

Around this time last year, Christopher Mims at the Wall Street Journal did a profile on the experiment we were running with Indie.vc. Buried in the piece was a mention of a new fund we’d closed to continue iterating on the experiment.  That’s the only mention of the new fund.  In the proceeding months since his piece, it has become clear to me that there’s still some confusion around the relationship between OATV and Indie.vc. Tho I’ve shared the relationship between the two in private emails and conversations, I think it’s worthwhile to unpack it a bit more publicly so we can remove any confusion about the current state of both.  OATV (O'Reilly AlphaTech Ventures) was founded in 2005 by myself, Mark Jacobsen and Tim O'Reilly. We were one of a handful of “institutional” super angel/micro VC/seed funds, which is to say that we raised Continue reading "OATV and Indie.vc"

Friend or Financier?

The biggest mistakes I make as a VC come when the emotions of friendship cloud the realities of being a financier. That’s an easy line to blur when your business is based on personal relationships with founders and instinctual investments. At the earliest stages, when there’s little, if any, meaningful data on which to anchor a decision, an affirmative answer to the question of “is this someone I believe in” is often all an investment decision hangs on. Working closely with, and believing in, founders often leads to deep and meaningful friendships.  I often envy the Warren Buffet types who pour over cold and sterile annual reports, company financials and stock charts looking for anomalies to explore and untapped value to unlock. There’s a structure and precision to their craft of picking. Yes, over time, they occasionally build friendships with managers they back, but those relationships begin on a bedrock Continue reading "Friend or Financier?"

What Are You For?

Today feels like the golden age of being Anti something. If my Twitter feed is any indication, there is literally no end to what people are being Anti of Anti Trump. Anti Hillary Anti Fox News. Anti CNN. Anti Bay Area. Anti New York Anti Wal Mart. Anti Juicero. Literally no end. Indie.vc has even been described as Anti-VC.  We aren’t anti-VC, we’re for profitability and all the freedom that comes with it. Freedom to choose how, when and if to scale. Freedom to raise, or not, from a hugely leveraged position.  We think founders who are for that too are great people to be in business with. And we think the companies they’re building on that solid foundation can make for great returns.
We’re for all of that. Being anti something pushes people and ideas away.  Being for something pulls them in.  Try it. Continue reading "What Are You For?"

The Time Thief

my Krouse Rosenthal died yesterday.

I don’t know her, but I cried when I read the dating profile she wrote for her soon to be widowed husband.

Like, big ugly cried.

I can count the number of times I’ve cried as an adult on one hand. Well maybe I’d need to borrow a few fingers, but the point is I rarely ever cry.

Maybe its because my wife is out of town and I miss the mornings with her after the kids have gone to school and the nights where we don’t even have to be talking but just being near each other is enough to put us both at ease.

Maybe it was because my son had posted a picture with his arm around his little girlfriend wishing her a happy birthday. And he still looked like a little boy. Like my little boy. And I know that won’t Continue reading "The Time Thief"

Living Above the Store

In another life I will come back as a chef with a small restaurant in a little village with less than 10 seats inside and a quaint patio outside. Word of my talents will spread far and wide and people will come from the furthest corners of the earth to sit and sample and soak in the special little space we’ll create.

Until then, I’ll watch Chef’s Table on Netflix. 

There are so many wonderful lessons for founders to take from the unique perspectives on food and business and creatively shared by the chefs the show profiles. 

For even the most talented chefs, the business of starting and running a restaurant makes launching your website in your underwear look as simple as, well, launching a website in your underwear. Their stories of sacrifice, perseverance, overcoming obscurity and rising to fame are so well crafted in the course of Continue reading "Living Above the Store"

My First Lyft Ride

Over the years I’ve used Uber 600+ times and spent 10s of thousands of dollars with them. I am neither an Uber apologist nor critic, but I did something today I’ve never done. I used Lyft. I have actively disliked Lyft since the get go. The fist bumps, the pink mustaches, the overly friendly drivers. Not my style.  The choice today was not made lightly. But it was revealing. I remember back when Google went public. There were countless and breathless debates about how there were no switching costs for anyone to move from using Google to using, say, Yahoo. No one was locked in. They could just as easily point to another search engine to find what they needed. Search was search, a commodity. Tho, at a high level that may be true (search being search) to the average user of Google at the time, Google was a Continue reading "My First Lyft Ride"

If You Don’t Know How Much You Need the Default is Always “More”

“What’s your end game?”, I asked This particular founder had just raised a mid eight figure round of funding. And, after hearing about struggles with their board, struggles with the new investors and watching their ownership drop from mid double digit percentages to high single digits I couldn’t help but wonder. What’s your end game? Seemingly surprised, the founder shot back that this round was a step towards the next nine figure round and another brick in a world domination strategy to upend a market longing to be disrupted. But is that really what they wanted or is that what investors wanted to hear? Upon reflection, this founder acknowledged that they would likely be replaced or leave by the next round. A disruptor disrupted. We see this all the time with startups and fundraising. How much do you want to raise? $2M. How much do you really need to Continue reading "If You Don’t Know How Much You Need the Default is Always “More”"

One (round) and Done

Just as we’re running out of derivatives for “seed” and letters in the alphabet there’s a new funding trend emerging. Call it Bootstrap+, Fundstrapping or Series 1 and done, there seems to be a move towards simplifying the various funding schemes and getting down to the business of building a real business. In their funding announcement last week, the Text IQ team was careful to note their profitability. And not just a token “ramen” level of profitability:
The startup is profitable, with January revenue of 10x its burn rate and sales expected to be in the millions for the quarter. 

Interestingly, and relevant to this trend, they’re viewing this as a strategic round of funding and possibly the only round they’ll raise: 

Text IQ is profitable. And for its first outside funding, it’s taking only about $3 million from top investors and veteran legal counsels in a seed round Continue reading "One (round) and Done"

Helluva Lifestyle Business You Got There

Unicorns and venture capital go hand in horn. Or so the story goes. Have a billion dollar idea, raise a little bit of money, show a little traction, raise a lot more money. Rinse and repeat. You can’t compete with out it! They say. You can’t scale without it! They say. Weaponized balance sheets have become the competitive strategy of this anabolic age. Anything less makes for a less ambitious business owner running a “nice little lifestyle business” But there’s an interesting trend brewing. If you look at the last 6mo. of $1B +/- tech exits, you’ll notice something peculiar. Of the 9 exits in that range there are 2 IPOs (The Trading Desk and Nutanix) and 7 M&A transactions. 4 of those M&A transactions are what you’d expect:

Lessons Learned From a Million Miles and 5 Kids

It was super early and I was still waking up and maybe I was a little grumpy but seriously why was this flight attendant being so nice to me? They had way too much energy and knew way too much about me to be so in my face at 5am.

“This is a big day for you today isn’t it Mr. Roberts?”

Um. Sure?

Silence fell over the cabin as the Captain saddled up to my arm rest. A firm handshake and a few awkward moments later a Delta Executive boarded the plane and revealed the morning’s surprise.

I was presented with a pen and a note and a voucher for a roller bag. 

Congratulations Mr. Roberts! 

You’ve just passed 1 Million miles on Delta. 

Thank you for your business.

The ensuing flight ended up being far more reflective than I’d planned.

I started travelling near Continue reading "Lessons Learned From a Million Miles and 5 Kids"

Lessons Learned From a Million Miles and 5 Kids

It was super early and I was still waking up and maybe I was a little grumpy but seriously why was this flight attendant being so nice to me? They had way too much energy and knew way too much about me to be so in my face at 5am. “This is a big day for you today isn’t it Mr. Roberts?”
Um. Sure? Silence fell over the cabin as the Captain saddled up to my arm rest. A firm handshake and a few awkward moments later a Delta Executive boarded the plane and revealed the morning’s surprise. I was presented with a pen and a note and a voucher for a roller bag.  Congratulations Mr. Roberts!  You’ve just passed 1 Million miles on Delta.  Thank you for your business.
The ensuing flight ended up being far more reflective than I’d planned. I started travelling near Continue reading "Lessons Learned From a Million Miles and 5 Kids"

Funding Independent Alternatives

A few weeks back, I was sitting at the counter of a local coffee shop waiting for my meeting to show up. As I sat, I overheard a conversation between the owner and a prospective vendor. The meeting ended with the vendor going in for the close. And their tactic struck me.
“We’re a small family owned business. We only work with a small number of customers so we can provide them the absolute highest level of service and best possible products.”

With that they shook hands and walked out. I have no idea if they closed the deal or not. My meeting arrived and my day went on, but I couldn’t shake that pitch. In a tech world that touts growth hacking and new features and scale, it was kind of refreshing to hear someone sell smallness and independence and a personal touch. But, if you read the Continue reading "Funding Independent Alternatives"

A 12 Step Program for Breaking An Addiction to Venture Capital

Venture Capital is a hell of a drug. At Indie.vc we’ve developed a simple 12 step program for those of you looking to break the habit in 2017: Step 1- We admitted that we are powerless over VC’s partnership dynamics, tastes in trends, and their ever moving milestones—and that trying to time, or anticipate, them will make our lives, and the lives of our customers and employees unmanageable.
Step 2- Came to believe that a metric greater than our valuation could restore us to sanity. Step 3- Made a decision to turn our will and our lives over to the uncompromising vision of the business we are uniquely qualified to build, not the one best suited to attract VC investment. Step 4- Made a searching and fearless inventory of ourselves, our team and our prospects as a standalone, profitable business. Step 5- Admitted to our team, to ourselves, and to our customers the Continue reading "A 12 Step Program for Breaking An Addiction to Venture Capital"

A 12 Step Program for Breaking An Addiction to Venture Capital

Venture Capital is a hell of a drug. At Indie.vc we’ve developed a simple 12 step program for those of you looking to break the habit in 2017: Step 1- We admitted that we are powerless over VC’s partnership dynamics, tastes in trends, and their ever moving milestones—and that trying to time, or anticipate, them will make our lives, and the lives of our customers and employees unmanageable.
Step 2- Came to believe that a metric greater than our valuation could restore us to sanity. Step 3- Made a decision to turn our will and our lives over to the uncompromising vision of the business we are uniquely qualified to build, not the one best suited to attract VC investment. Step 4- Made a searching and fearless inventory of ourselves, our team and our prospects as a standalone, profitable business. Step 5- Admitted to our team, to ourselves, and to our customers the Continue reading "A 12 Step Program for Breaking An Addiction to Venture Capital"

Meaningful Exits for Founders

For an industry that doesn’t do it for the money, we sure talk about money an awful lot in the world of startups. A few posts were written this past week diving deeper into the numbers that drive VC returns which, in turn, drive behavior in startups who’ve raised money from VCs. One post, written by Samuel Gil, outlined what is considered a meaningful exit for VCs. According to Sam’s math, a meaningful exit for a fund should have the ability to return 33% of a given VCs fund, a “home run” exit should be able to return their entire fund in a single investment. This is a helpful visual he put together to show the resulting math behind meaningful exits at various fund sizes:

Across all of these scenarios, the smallest meaningful exit for the tiniest fund is a purchase price of $85M.  Now, we don’t know
Continue reading "Meaningful Exits for Founders"

When Your Customer is VCs, Your Product is the Stock

There’s an exchange in Season 2′s final episode of HBO’s SIlicon Valley that I haven’t been able to shake.  After deciding to change the focus of the business, Richard confronts Action Jack, the CEO installed by the board, about the compromises that are being made to the product to fit their new focus on the enterprise market. The following exchange ensues:
Jack Barker: Do you know what Pied Piper’s product is Richard?
Richard Hendricks: Is it me?  Jack Barker: Pied Piper’s product is its stock. Whatever makes the value of the stock goes up is what we are going to make. Maybe sometime in the future, we can change the world and perform miracles and all of that stuff. I hope we do. But like I told you before, I am not going to mortgage the present for that.

Today, First Round released a phenomenal report on The

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Continue reading "When Your Customer is VCs, Your Product is the Stock"

Every Business is a Lifestyle Business

As we walked around the block, away from the team and the screens in the office, the founder started to open up:
“In the last year I’ve gained 20lbs, I’ve stopped exercising, I’m basically living at the office, not seeing my family, I’ve never been so stressed in my life.”

The t-shirt was definitely tighter and the bags under the eyes were definitely bigger than they were just a year earlier.  Whether bootstrapped or funded, there is nothing easy about the lifestyle of building a business. Even those who appear to be on easy street, running cash generating machines, have experienced deep personal, and often existential, crises in achieving any modicum of success. Steve Jobs once describe the entrepreneurial experience in stark terms:

I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance. It is so hard. You put Continue reading "Every Business is a Lifestyle Business"

You Don’t Need a Master Plan You Just Need to Start

Startups are overdosing on ambition these days. Everything has be a billion dollar idea that changes the world or it isn’t worth doing. These days, even a billion doesn’t seem to be enough:
I’ve probably sat in on eight unicorn presentations [recently], and five of them use the world ‘trillion.’ Now I don’t think I had heard the word trillion in an investor presentation before that day.“ But we have done something in the ecosystem to encourage this type of outlandish promotion — where you feel like you need to use words like trillion.

Reality is, that for every thoughtfully articulated and executed world domination master plan, most of the biggest and impactful companies started out with much more humble ambitions. Some just wanted to give students an alternative to a summer job. Others just wanted to feel make their friends feel like a pimpsContinue reading "You Don’t Need a Master Plan You Just Need to Start"