Kickstarter in 2012
Kickstarter published a retrospective on 2012. It's worth browsing. Here's the lead in
Musings of a VC in NYC
3361 posts categorized "Venture Capital and Technology"
In Between: The Tough Place To Be
In a comment on the latest tally of VC fundraising, NVCA President Mark Heesen said:
“The venture capital fundraising environment has settled into a ‘new normal’ which is characterized by a barbell structure of larger funds which are stage and industry agnostic on one end, and smaller, early stage, industry or region specific funds on the other.
This is certainly true and has been for a long time. The two successful models seem to be the large megafund and the small early stage fund. It's hard to be anything else in VC.
Entrepreneurs need to understand this. There are a ton of options out there for early stage funding. And if you get to the stage where you need a growth round from a big fund, there are plenty of options for that too. But if you are looking for a Series B round to help you grow from early revenue status to true growth status, you are going to find that challenging.
To put it another way, there are plenty of us who fund hopes and dreams. And plenty of us willing to fund true success. At the stage where you are past hopes and dreams, where you have customers, revenue, and a real business, but have not yet reached "true success", there just aren't many investors to choose from.
The truth is early stage investors are often asked to be the funders of last resort for the "in between" stage. We do that all the time at USV. We will lead or do an inside round for the Series B and Series C rounds if we have to. So choose your early stage investors well. Make sure they are willing to see you through the in between phase if need be. Because they will probably need to.
Putting 2012 To Bed
I'm typing this on my phone as our plane is starting to descend into the NY metro area. We will land at JFK within the hour.
I've wanted to write a year end post for days. I actually wrote one and stored it as a draft. But it comes across as a whiny complaint about the shitty year that 2012 was. And it was in many ways a shitty year for me. But the reason I couldn't publish that post is it didn't capture the greater picture that 2012 represents for me.
I moved every year as a kid. Throw away the old. Start with the new. That is etched indelibly in my psyche.
My venture investing career has three phases all roughly 6-8 years long. The first, at Euclid, was software to internet. The second, at Flatiron was internet to bubble. And the third, at USV, has been web 2 to mobile. I have always used a new firm to denote a new investment phase for me. Throw away the old. Start with the new.
And I feel that 2012 is the next demarcation year for me but this time I have to do it in an existing firm with an existing portfolio. That is new for me and I don't have a model for how to do it.
It was reported a few weeks ago that I had not made a single new investment in 2012. That is true. In fact, I have not made a single new investment since the summer of 2011. Fortunately my partners have picked up the slack and we have made a dozen or so terrific new investments at USV during that period.
I have been working on a new investment and I hope it will close in early 2013. So it is likely my 18 month dry spell will end soon. And I am going to treat that dry spell like a new start. I don't want to invest in the same stuff today that I invested in five years ago. I want to do new things, learn new lessons, and share them with you.
The funny thing about 2012 is that our firm made more money in 2012 than ever, with some huge carry producing events. And yet I think of it as a wasted year professionally. I don't like harvesting, I like planting the seeds, and helping them grow into fully flowered plants. That's where I get joy from my job.
So as I put 2012 to bed and think about 2013, I am happy to see this past year enter the history books. I didn't get much joy from it. And I am looking forward to doing new stuff in 2013, learning new things, and working with new people.
Happy new year everyone.
Advice for 2013: Deliver On Your Promises
There has been a lot of discussion out there about the Series A crunch, the consumer sector falling out of favor, VCs getting more conservative, the need to focus on revenues instead of users, and so on and so forth.
All of this is going on and the environment is certainly getting tougher for entrepreneurs. As I have said before, we have had the wind mostly at our back for the past seven years and I feel the winds changing on us. They are headwinds not tailwinds right now.
At times like this I think it is critical to focus hard on the most important things for your business. That could be revenues but may not be. That could be user traction but may not be.
I would like to tell a story. The company in this story will go nameless. It is not material to the story. We met the team a year ago as they were just launching. They had huge ambitions for 2012 and we thought they were delusional. We passed on the investment even though we really liked the team and the market. They came back in a month or two ago. And not only had they accomplished everything they said they would do, they got done a few things that were not even in their plans at year end 2011. We committed to lead their next round at a full valuation. There will always be money for teams and stories like this.
But as I look around the broader startup market (and certainly in our portfolio too), I don't see a ton of those stories in 2012. I see delays in getting important new product initiatives out. I see revenues coming in well below plan. I see new ankle biter competitors emerging and taking share causing a loss of focus and missed numbers. I see "black swan" events that could not have been predicted causing short term disruptions.
None of these are fatal to a startup but in the environment we are in they will not help you. Investors are not giving the benefit of doubt in markets like this. And your employees aren't going to be patient forever either.
So if I can give entrepreneurs a single piece of advice for 2013 it would be to deliver on your promises. Not just to your investors but also to your team and ultimately to yourself. This is no time to be in denial. That is a lethal attribute in times like these.
> composed in chrome on my nexus 4. excuse the typos and lack of links.
Video Of The Week: NY Enterprise Tech Meetup Talk
Earlier this week I attended and spoke at the NY Enterprise Tech Meetup. My talk was based on the Networks and Enterprises post I wrote this past August. The "talk" portion is about 20 minutes, and the Q&A portion lasts another 40 minutes. Here it is:
Video Of The Week: Cities, Networks, and Growth Curves
Kirk sent me this TED Talk yesterday. It is the Physicist Geoffrey West talking about cities, networks, and growth curves. Regular readers of this blog will recognize a bunch of themes that I am obsessed with in this talk. So check it out and let me know what you think in the comments.
Gurley and Om
The first thing I do most morning is check #discover in Twitter. This morning I saw this in my feed:
In conversation w/VC Bill Gurley/Benchmark Capital [six short easy videos. he & I talk VC, startups & @uber gigaom.com/2012/12/11/bil… @bgurley
— Om Malik (@om) December 11, 2012
Bill Gurley and Om Malik are two people that I deeply respect. They are thoughtful and have been in the game for a long time. They know their stuff and they focus on what's important.
There are six videos up on GigaOm, each about five or six minutes long, that captures a conversation they had recently. I encourage everyone to watch all of them, but this one is my favorite. It's about nine minutes long even though the player says 17mins. Bill is such a great analyst and historian of our business. And he's 100% correct as well.
I am going to put this quote on my office wall: "You can't make money with a consensus accurate prediction" I just love that way of thinking.
NY Enterprise Technology Meetup
Next tuesday evening, I am giving at talk at the NY Enterprise Technology Meetup. I will talk about networks in the enteprise. I plan to use USV investments like WorkMarket and Pollenware to discuss how entrepreneurs can use networks to build powerful enterprise oriented businesses.
If you plan to attend that meetup or if you are interested in networks and enterprises, I have created a hackpad where you can introduce suggested topics for me to touch on in my talk. This hackpad is totally open and anyone can contribute to it.
I know that the meetup is almost completely sold out and that many of you who might want to attend will not be able to. I hope the meetup organizers will record the talk so I can post it here for everyone to see after the fact.
Arduino, 3D Printers, Kickstarter, and BitCoin
AVC regular Dan Ramsden posted a thougtful essay on GigaOM yesterday. After I read it, I sent Dan an email and I said "do you think big beats little in this phase we are in?" Dan replied that he did and asked me what I thought.
I think David beats Goliath all day long if you are focused on the right sectors. Clay Christensen has shaped my thinking on this. You just need to look for sectors where the incumbents can't and won't adapt to new emerging models and where the innovators look like and are being derided as "toys".
I told Dan that Arduino, 3D printers, Kickstarter, and Bitcoin are four "toys" that I think will radically reshape some big industries in this decade. Of course it may not be Arduino as we know it. Or it may not be Bitcoin as we know it. I will avoid commenting on Kickstarter since we are investors there.
The leaders in 3D printing today may not be the leaders in 3D printing tomorrow. All you have to do is look at the big guys suing the little guys to know that there is a lot of innovation and change afoot in 3D printing right now.
I have said this before. The more I hear people laughing at, deriding, and dismissing something the more I think it is likely to be a big deal. I remember when the common refrain about Twitter was that nobody wants to know what someone had for lunch. Well maybe they do. And maybe Bitcoin will be accepted in Starbucks someday. And maybe your phone will be made from Arduino components and the cover will be 3D printed. And maybe the movie you are going to see in the theater today will have been funded on Kickstarter.
Maybe is a powerful word. If maybe represents something big and powerful then it is worth chasing that maybe. And it is worth funding it too.
Mary Meeker's 2012 Internet Trends
Mary published this presentation this past week. I love these "state of the internet" presentations Mary does. There is so much useful information and insights in them. I encourage all of you to work your way through it this weekend if you haven't already done that.