April 2013
6 posts
What I've learned from Little League
As my friends know all to well, mine is a life immersed in baseball. Yes, there’s that venture investment stuff, but in between board meetings, team meetings, meeting new companies, staying in touch with my networks and breaking down the barriers to data entrepreneurship at Michigan and Columbia there is baseball. Both my kids are intense baseball players. My wife is a Little League...
Breaking through
I spend a bunch of time speaking at events, guest lecturing at friends’ classes and mentoring young people. It is something I feel passionately about and enjoy a great deal. I always try to be blunt, honest and unambiguous with my input, hoping that at least some of the take-aways will be employed by those hearing my words. But I continue to be surprised by the number of common mistakes made...
“Dear Friends,
We are, no doubt, shocked by yesterday’s events at the...”
– Rabbi David Adelson, East End Temple, April 16th, 2013
The response to the terror in Boston: Channeling...
Yesterday’s horrific and senseless tragedy in Boston stirred up many of the same feelings I had on a beautiful September morning almost 12 years ago. Sadness. Anger. Rage. Confusion. And simply Why? Why did this happen? How could it happen at a time of celebration, peace and personal and community achievement? Words simply don’t do the feelings justice. I went to Twitter to get more...
Reflections on IA Ventures, 3.5 years in
I periodically write about my learnings as the leader of IA Ventures, principally to unlock what is in my head and in my heart. As an operating partner with people who are giving their lives to building their businesses and a financial partner with those who have entrusted us with their capital, this is a very serious undertaking. Sometimes I find it necessary to call a “time out” in...
VC funding vs. Crowdfunding - let's get real
Crowdfunding is all the rage. Even the SEC recently blessed one type of crowdfunding for which there was risk of an enforcement action. Several in the early-stage ecosystem have called for VCs to “up their game,” as alternative paths to financing create competitive threats to both incumbent firms and the venture model itself. I think drawing parallels between crowdfunding and VC...
March 2013
2 posts
Focus, focus, focus: Understanding your value...
Distraction and diffuse efforts are killers, especially in nascent businesses. Trying to do too much sucks valuable resources from accomplishing the core mission, but is often viewed as being important for “keeping options open” or “controlling one’s destiny.” The goal of a seed stage company shouldn’t be optionality preservation but laser-focused customer engagement, and to let the market...
Taking the long view (when building the business)
In the wake of my SXSW chat with Lauren Lyster of Yahoo! Finance, I once again began to think about the relationship between equity valuation and business decisions. In my perfect world, a business is financed in a manner that optimizes financial outcomes by creating a set of decision points along its growth trajectory.
This “optionality” is created by raising capital at times, in amounts and from...
February 2013
1 post
Come join the IA Ventures Family
I started IA Ventures a little over three years ago with Brad and Ben. The original thesis: build an early-stage venture firm designed for the long-term that focused on companies seeking competitive advantage through data. Infrastructure. Platforms. Applications. All of it. We’d take a life-cycle approach to investing, building our positions early, working hard in partnership with our...
December 2012
3 posts
Founders: Eyes wide open
Raising money is a hard and sometimes scary thing. Friends & family money might be relatively easy to raise but often comes with lots of emotional strings attached. “What if I lose their money? Might this adversely impact our relationship? Will I feel horrible and guilty?” Raising angel money is somewhat harder, but with less drama and entanglement. “These people believe in me and are...
Book value matters
Solving an important problem is generally the credo of most entrepreneurs. However, the solutions can take a variety of forms: core technology (e.g., a new database); business model (e.g., peer-to-peer lending); or service (e.g., next-gen mobile optimized retail banking). Certain businesses give rise to differentiated intellectual property which is sometimes patentable and often salable. Others...
Knowing when it's time to go
Do I wake up excited to start the day? Am I frustrated by the dumb things I do that I know I can - and should - do better? Can I feel myself learning, growing and developing in my role? Is there a sense, a hard to put into words but a know-it-when-I-feel-it sense that I’m making progress towards my career and life objectives? These have long been the hallmarks of roles in which I’m...
November 2012
4 posts
Karma
Life is a series of interactions. How we manage these interactions plays a meaningful role in our future. This is particularly relevant for entrepreneurs and investors, between which exists a delicate symbiosis that teeters between cooperation and competition. This is further complicated by the fact that investors often work together, yet have the dueling agendas of doing right by their portfolio...
“We are small on purpose. We don’t want to be the market. We want to invest...”
– Fred Wilson, What Has Changed, November 25th, 2012
Plan well, execute the plan
A new market entrant. A competitor that gets a bunch of great press. A peer that just raised a ton of money. The external environment presents myriad distractions that can cause founders and their teams to “freak out” and deviate from their established game plans. And in my experience, when plans and behaviors are quickly adjusted in response to short-term exogenous events, bad things...
The great unbundling
Earlier this week it was announced that the Big 10 conference (which currently has 12 teams) is undergoing yet another “realignment” - Maryland and Rutgers are being added for NCAA football, substantially expanding its geographic footprint and, at least in this man’s opinion, further diluting its history and tradition. This was a brazen move by Big 10 leadership for which its...
September 2012
1 post
Should raising money be a blood sport?
Andrew Ross Sorkin’s missive on mistakes made in the Facebook IPO has given rise to some strong emotions. While Andrew sought to lay much of blame at the feet of Facebook’s CFO, some others (here and here) view the CFO’s responsibility as simply being to get the highest price for the shares offered, full stop, and in that light David Ebersman did an absolutely flawless job. I...
June 2012
1 post
Mis-labeled bubble: it's the structure, not the...
I’ve lived through bubbles. Lots of them. They are powerful, make a few extremely rich and many wondering what happened to their pocketbooks and their pride. What I’ve witnessed in the seed stage venture environment has not had these hallmarks. Sure, some prices for pre-revenue and often pre-product companies in certain geographies, e.g., Silicon Valley, have gotten bid up, it...
May 2012
7 posts
Is FB the next BX?
The euphoria surrounding the upcoming Facebook IPO is reaching untold levels. Retail brokers have stopped taking orders. The offering price range has been sharply increased. And the amount of stock that sophisticated investors and insiders are offering has jumped dramatically. So what should one think about this in light of the upcoming IPO? I’ll tell you - buyer beware.
The market dynamic...
LTCM. Amaranth. JP Morgan?
Will Jamie Dimon go down in history as the John Meriwether of this generation? Or perhaps the Nick Maounis of our time? Either metaphor can’t make the current CEO of JP Morgan feel very good about his legacy. And if I understand the trade properly, the end of the story is nowhere near being written.
Banks hedge risks. This is what they are supposed to do. And when they don’t, the...
Building the perfect machine
If the goal is to do something exceptional, nothing is more important than building a great team. It is very rare that success is a truly individual discipline. Whether one is talking about world-class researchers, top-tier tennis players or sought-after start-up founders, stellar results are the outgrowth of carefully coordinated and chemically-balanced team efforts. I had the benefit of...
Play your game
I’ve written a lot about the importance of focus among start-up teams. This is a very closely held belief. Develop a hypothesis. Test the hypothesis. If proven, move forward and add gas. If disproven stop, take stock, and determine whether or not to gin up a new hypothesis or go home.
The same is true for investors. All the noise around crowdfunding, party deals and all-angel rounds...
Some thoughts on JPM
With the web afire with criticism over JP Morgan’s recently announced (and unexpected) $2 billion trading loss, a few “life lessons” came to mind as to how Jamie Dimon - and his PR department - bungled this badly:
Know the facts before taking a stand. When news of a “London Whale” came to light a month ago, and this trader was linked to JP Morgan, Dimon issued a...
Board member vs. mentor dynamics
As a venture investor, I spend a ton of time trying to as helpful as I can be to my portfolio companies. Most of my regular contact is with the CEO and founder. I actively try to understand what they most need from me and to give it to them. Sometimes it is functional help: thinking through their financial model, hiring plans, financing strategy, etc. Other times it is help “closing the...
Entrepreneurship and optionality don't mix
Laser focus vs. keeping options open. This is an eternal struggle faced by start-up founders and corporate CEOs alike. While focus brings both purpose and increased odds of meeting a particular goal, leaders are plagued by the fear of “What if the goal I’ve achieved is the wrong goal? I’ll have hurt the company, my reputation, my ego and my career in one fell swoop.” This...
Being a builder: balancing conviction and...
Building is hard. It just is. Great builders have bold visions, boundless passion and ample energy to achieve the mission. However, great builders also find it necessary to course-correct based upon objective data, subjective input or gut feel that synthesizes both quantitative and qualitative factors. At accelerators the term “mentor whiplash” is bandied about to describe the myriad...
April 2012
4 posts
Should venture capital scale?
My friend Dave McClure’s thoughtful and provocative post on the scaling of venture capital made me think. It definitely rubbed me the wrong way and I think I know why - because I don’t take it as a given that venture firms, by definition, should scale, whereas the premise of his post seems to be that we as an industry are failing by not doing what we are telling (and hopefully helping)...
When "free" and "no fee" is anything but
A recent tweet from friend Aaron Pressman reminded me of a long-standing deception that needs to be corrected - clarity around the meaning of “free” and “no fee.” In the article Aaron cited, both BNY Mellon and State Street are are being sued by state pension funds over lack of truth in marketing around foreign exchange trades. In essence, trades which were represented as...
Being the preferred investor
I’ve had the words “deal hunting” written on a yellow stickie by my desk as a reminder to write a post on how we compete for investment opportunities. Then Fred’s recent post Coming of Age helped to further clarify my thoughts on the matter. I think this issue is most relevant for younger firms who have yet to create the brand value and track record of a Sequoia, Kleiner,...
March 2012
3 posts
Thoughts on VC portfolio construction
Issues such as “portfolio construction,” “reserve policy” and “forced rankings” don’t make for sexy reading, but in my opinion are critical elements to building and managing a successful venture investment portfolio. Given that I am trying to build the best venture partnership I can for the long-term, I am seeking to optimize across three dimensions: (1)...
From Enterprise to SaaS: the pain and the promise
GigaOm recently published an interesting article on Oracle’s challenges of shifting towards a “metered pricing” model. From my perspective it raises a series of fundamental issues addressing how enterprises buy and consume software:
Is the classic enterprise software licensing model a dying vestige of a prior generation?
Can legacy enterprise software-driven firms make the...
Data Entrepreneurship
I have been thinking a lot about what a data scientist really is and how we, as academic and business communities, can help more people develop important data-driven skill sets. But every time I use the term “data scientist” to describe what I’m seeking something doesn’t feel right. Probably because “scientist” to me implies something being done in a lab, not in...
February 2012
6 posts
The data scientist v2.0
I’ve been thinking deeply about the need for more people facile with extracting meaning from data - or a “data scientist” for lack of a better term. My friend and colleague Drew Conway developed a useful model for thinking about the attributes of a data scientist. He essentially views this individual as sitting at the intersection of three spheres of a Venn diagram -...
Thoughts from Ann Arbor
Last week I spent two glorious days deeply engaging with my alma mater, the University of Michigan, and the Ann Arbor tech community. I had the privilege of presenting at the Ann Arbor New Tech Meetup (thanks, Dug!), exchanging ideas with the Wolverine Venture Fund, and spending lots of time with professors and heads of different programs and institutes such as the Zell Lurie Institute, the Center...
“When everyone seems to want to unload the same risks at once, it is a good idea...”
– Wall Street Journal 2/25/2012, Is “Derisking” Even Riskier?
IA Ventures - the next phase
The facts are straight-forward. We just closed IAVS Fund II. This new fund, at just over $105 million, allows us to pursue the same investment strategy we followed in Fund I – investing in companies that create competitive advantage through data. Just like Fund I, we will continue to invest in strong founders at the Seed, Series A, and even sometimes Series B stage. As part of this fund we will...
In startups, Always be...
recruiting.
selling.
raising money.
thinking about risk.
worrying about running out of money.
focused on firm culture.
selling.
recruiting.
having fun.
aware of your utility function.
honest with partners, employees and investors.
evaluating yourself against objectives.
humble.
identifying and leveraging mentors who can help you grow and achieve your objectives.
“paying it...
What startups can learn from the NY Giants
Last night’s Giants/Patriots game was another epic contest, displaying the greatness and intertwined fortunes of two of the best teams of the era. However, what underpinned the contest were the widely divergent paths of the teams who had reached the pinnacle of the sport: a 13-3 Patriots team with arguably the best quarterback (Tom Brady) and coaching mastermind (Bill Belichick) of our...
January 2012
10 posts
Founders: Be The Honey Badger
I was recently watching a funny YouTube video with my kids titled The Crazy Nastyass Honey Badger and having a few chuckles when it hit me: that Honey Badger actually has many of the essential characteristics of a start-up founder:
Determined. The Honey Badger goes after what it wants - hard. It has the same kind of laser focus and persistence as every great founder I’ve ever known. Hungry?...
Loyalty
One of the hardest dynamics I’ve had to manage throughout my career is loyalty. I, like most of my friends and people whom I respect, have feelings of faithfulness and devotion to those with whom we interact - partners, employees, investors, vendors, etc. However, there is a point beyond which loyalty can become costly - too costly, in fact - for historical relationships to remain as they...
What's the big deal about Big Data?
Every so often a term becomes so beloved by media that it moves from “instructive” to “hackneyed” to “worthless,” and Big Data is one of those terms. When I started IA Ventures in 2009, I used “Big Data” as a quick and easy way to describe the thematic focus of my fund. And it worked. People got that it implied tools for managing large amounts of...
The perils of "free riders"
Starting a company is, by its nature, an “all in” affair. You’ve either got the passion to run through walls, suffer painful failures and do unnatural things to achieve success or you don’t. And given the challenges of building a company and the tremendous amount of hard work and stress borne by the founders, they are generally focused on finding people who share a similar...
Evolving the technical organization
You and a pal have what you think is a great idea. You hack some code together and build a simple prototype. You get some feedback, like what you’re hearing and decide to go all-in on a start-up. You build some more, maybe convince another jiujitsu developer to join your little cadre on the come, and build enough product to demonstrate a vision that is ready for some angel capital. You take...
Pacing
One of the most difficult issues I’ve grappled with during my transition from angel investor to venture capitalist is that of pacing. By pacing I mean the rate at which capital is deployed, particularly with respect to initial investments in companies. Every fund has the notion of an “investment period,” the span of time over which the portfolio is built. It is commonly between...
“In such a (fat-tailed) world, prudence is the name of the game, and patience...”
– Mohamed El-Erian, Wall Street Journal, 1/9/2012
Letting go
In my experience, exceptionally bright, driven, visionary people commonly share a particular attribute: a high need for control. These characteristics are also hallmarks of the startup founder, who brings maniacal focus, evangelical passion and a penchant for multi-tasking to the table. As they bring on co-founders and early employees, you can often find the founder speaking with investors,...
BRYCE DOT VC: Data Data Everywhere and Not a Drop... →
brycedotvc:
As I tune in and out of the recent flurry of discussion around “big data” I can’t help but be reminded of the the old sailor poem:
Water, water, every where, And all the boards did shrink; Water, water, every where, Nor any drop to drink.
If I had a nickel for every founder who told…
“The beauty of collaboration towards solving big, bold problems:
Even before...”
– NYT Article Power in Numbers on Eric Lander, who heads up the Broad Institute, 1/2/2012.
December 2011
17 posts
Thanks...
…to those who read and contribute to the dialogue on Information Arbitrage. I have learned a ton from the process of writing and from the interaction I’ve had with my readers and commenters.
…to my portfolio companies. While I do my best to work hard for you and to help in your quest to achieve your missions, I can safely say that I am learning more from you than you are from...
betashop: Behind the Scenes: How Fab Raised $40... →
betashop:
Let’s face it, fundraising can be a real pain in the ass for the entrepreneur.
It takes up a ton of time that can be otherwise spent managing the business.
Sure, it’s a necessary evil, but it’s also typically a big distraction.
It’s also a lot like dating. You have to go on a lot of first dates…
