Career Archives

The Story Behind My Investment In HourlyNerd

Toward the end of college, and again toward the end of graduate school, there was a predictable recruiting campaign from all sorts of consulting agencies looking to scoop up and hire labor. In exchange for brand, a high salary, and a bit of prestige, graduates would sign up early in the final year, start a plan to payoff their student debt, and sign-up for intellectually challenging work filtered down through various organizational levels.

I know all of this because I almost lived it. Worse, I wanted to live it. As I saw it all go before my eyes, I also jumped into the fray, practiced case questions, riding off the competitive juices of the process of staged interviews. That process exposed me to the partnership model of consulting shops. The hierarchy could be loosely described as “finders, minders, and grinders.” New graduates were “grinders,” grinding out the work with long hours; “finders” were the partners, who found new clients and managed existing ones; and “minders” sat in between the two, minding up and minding up.

Now, what if online networks could put the clients directly in touch with labor? Could that create more efficient flow of information, better working conditions, and better output?

I think so. A few years ago, I used HourlyNerd for a few projects and was surprised by the output. They used a vetted network of current and recent grad MBA students, matched by background and interest, to create slide decks, conduct research, and so forth. So long as I (the client) was able to scope out what I needed, the workers (students here) were more than capable of producing the work with the added benefit that we never had to meet, we were able to email and chat online, and they could keep their hours and location flexible.

Then, out of the blue, the founders pinged me about their latest round. This is a bit later stage from when I invest, but I asked the founders a ton of questions about their plans to scale, about how their marketplace could propel them beyond a services network. Even though my check was small for them at stage, they made a concerted effort to engage with me around all of my nitpicking questions. Through that process, I learned some interesting facts: Over a yearlong period, the company had nearly tripled its average project size, that most customers repeat purchases frequently, that the marketplace had very good liquidity, and an average sale price that would make an investor pretty happy.

So, I am breaking my own model for Haystack and investing “late” into HourlyNerd, partly because they’re empowering the folks who, like me, could’ve also taken that traditional path into consulting. With a company like this, now those workers are free to interact directly with clients, to build their own reputations around topics, to travel and live where they want to, and much more. It’s a mission I can support — not only with an investment, but also my time. Sign up here and give it a try, they offer a great discount to start.

The Rigidity Of Investment Slide Decks

It’s common practice among investors (and LPs) to “share decks.” In a world where all the action is in the private markets and where deal flow is never ending, scanning a deck shared and received via email is the quickest way to make a first impression and make a subconscious decision to invest more time in the opportunity itself. To be clear for this post, once bigger institutions start getting involved, having a set of slide decks (one to be emailed, one to present with) is critical, though as the market is pushing me to invest earlier and earlier, I’ve made some of my recent very early-investments either with an unpolished deck or no deck at all. And, it all got me thinking — at the very earliest of stages, does a deck even matter?

I mentioned this on Twitter, which sparked quite a discussion, and cited a post by Charles Hudson:

A number of people who I respect and who have way more experience than I do commented that decks are critical as a test to see how a founder can distill and communicate succinctly. It’s a critical form of business communications. No argument from me — though in the very early stages, what if the product isn’t well defined yet? What if the team is still forming? What if there’s data but it’s paltry? What if the product or service requires a behavior change or new market to form?

When I’ve met these most recent founders, they were working on a product or service, trying to design their model, and I saw something big in the mess of each early-stage company. In some cases, I went in and offered up my point of view of how it could be explained, especially to an investor audience. I don’t believe people starting these new companies spend too much time trying to fit their creation into a few slides or model — in fact, the opposite can be a negative signal, an overly polished slide in the early-stages can oftentimes reek. And, sometimes people creating this stuff don’t fully grasp what they could potentially have — which is why I get interested and involved early.

So, yes, eventually, you’ll need a deck. No argument there. But in the very early stages, other things can go a long way. People using and talking about your product on blogs and Twitter; or people talking about your service in the press (organically); or simply speaking to investors who can offer their own POV on how they conceive of your model after a phone or f2f conversation. Here, a short 3-5 slide investment deck may be worthwhile, just listing team, product, and vision — as a vehicle to get the call or get the meeting. Like Charles, I find the live conversation to be the most revealing.

Women On Stage In Venture Capital

In this post, I will talk about the presence of women on stage at venture capital (VC) events or as part of digital media. In the past, I created and produced about 75 short TV interviews on TechCrunch TV from about 2012-13, and after that show was cancelled, created and produced interviews with eight (8) VCs which spanned 12 episodes in total. Last year, I helped organize the Post-Seed Conference in SF (Dec ’14), and this year, as a friend, I helped StrictlyVC design and launch the “StrictlyVC Insider Series,” for which there has been an inaugural event and one coming up in May ’15.

Every now and then, someone will inquire about why there aren’t more women involved in these events or on digital media. Sometimes, these inquiries start as accusations rather than trying to open up a conversation with me, so in this post, I will do my best to detail some things I believe everyone should know and discuss openly:

TechCrunch TV: From 2012-13, while I was an official contributor to the publication, I created and helped produce a weekly TV show which included all founders and investors and one journalist (who happens to cover VC). Out of the 75 guests, there were only three female guests, but I certainly did ask many visible women to be on the show, and for whatever reason, they either declined or didn’t return my email. Looking back, I could have pushed it more as an issue, but I wasn’t consciously trying to achieve gender balance on the show.

Sunday Conversations: After the TechCrunch TV show was cancelled, I had a friend who kindly offered to sponsor all the video, editing, and production o the interviews, and for my first interview, I chose the guest who was slated to be on TechCrunch TV as that show was put to bed. After that, I chose a small handful of VC general partners and, in early 2014, decided to not continue them past 2014. I have since stopped, and the last four (4) were all of Keith Rabois. I extended the series with Rabois because of the overwhelming response from the audience who wanted more. I did not ask any VC women general partners to be on the show because almost as soon as it started, it was over.

[Today, I posted the audio and video from Sunday Conversations, and it triggered a conversation on Twitter. You can click here to open up the thread. As I mentioned, as soon as I started the show I basically made a decision to shut it down as my friend was producing the video out of his pocket. So, yes, there were no women out of these eight (8) guests, and had I continued the show, I would most certainly have tried again to bring women GPs on the show. I was surprised to learn some people didn’t believe that I had asked female guests in the past with TCTV, so all I can do is state here that I most certainly did. Many times.]

The Post-Seed Conference: In the organization of this conference, the organizing committee (which comprised of a woman entrepreneur) actively discussed this issue, and we all independently sent requests for speaking to a number of people; in my case, those requests were mostly not returned on email. Did I send an email to every single general partner at a VC firm? No, but I definitely spent time thinking about it and inviting people to speak, and it’s important for me that people know that. I recognize what people see is what they see, so I’m sharing a bit more about what went on behind the scenes. Right before the event, a female friend emailed me the note below, which triggered a conversation. I tried to explain that we did absolutely consider it and sent out invites, but they were not returned:

Hey! Would love to attend. I have to be honest though, I was shocked guys who I really respect like you and (redacted) would be cool with an event that has only 2 women speaking, both journalists it looks like? There are so many great female investors, I know women can be harder to come by and get to say yes but I can think of 20 women who are in sf and would be great, at least 5 of whom would say yes even on this short notice. Is there room to add more speakers on the panels? An investing conference that ends 2014 with no women investors feels like a step backwards :(

The StrictlyVC Insider Series: This was started by and is run by Connie Loizos. She is a friend, and I offered to help her organize a small handful of speaking events for her brand and newsletter this year. I will bring it up as a topic of discussion for one of the events.

Ultimately, now in 2015, I have my own blog, and I help out a little with StrictlyVC. I do not engage in organizing any other media or events, so it’s important people recognize this — just this blog and maybe 2-3 events with StrictlyVC. I will do my best to get more women in venture involved. People will see what they want to see, but it’s critical people know that many people do not respond to requests to appear at an event or on media. I’m sure there are many good reasons. Maybe they don’t want the scrutiny at work; maybe they don’t want to be part of a quota; maybe they don’t want to talk about this topic specifically, which would invariably come up; maybe they get too many requests because they’re visible and people are trying to get them on stage more. I could go on and on.

I do not recruit people into general partnerships, so this is a small way for me to bring the issue into the light, though of course, there are other inescapable facts about diversity in venture capital which I don’t have control over. I can think of one thing to do where I’m in total control of what is produced — on my blog — and I will email a bunch of female VCs to see if they’ll share their thoughts on email so I can reproduce them here in a compendium. I hope they respond, but I understand if they don’t want to, as well. (If someone has an email list of women VCs, could you please send that to me or post it here? Thank you.)

Dinner with Ben Thompson and GGV Capital

FullSizeRenderLast night, we hosted a small dinner @ Hakkasan to welcome Ben Thompson of Stratechery to town. In my work with GGV Capital, which for many years has been investing cross-border between Asia and the U.S., listening to Thompson speak over dinner was both expansive and current — in my opinion, he is the single best technology analyst out there today, so we were lucky to have his time. It was a long dinner and many friends of GGV’s showed up (thank you for coming!), here are some of the brief points the discussion created:

  • The effect of Asia-based messaging apps: I kicked off the discussion to focus on a topic I’ve been wrestling — what should we expect our U.S. messaging apps to do given what’s been going on in Asia? Thompson pointed out that since SMS is mostly free in America, there hasn’t been the glaring need for apps in the same way that consumers felt it in Asia. As a result, he postulates the evolution of functionality in our own messaging apps may not move quickly as SMS is good enough for many use cases.
  • Peer-to-peer and on-demand services in Asia vs U.S.: Thompson pointed out that the sheer density of many cities across Asia make it so that the things citizens need is often no more than 5 minutes from their houses, whereas the U.S., is very spread out and built mostly around a car culture. This makes sharing and on-demand more likely, whereas there’s less need in his region of the world, relatively speaking.
  • What to expect from Apple Watch: I’m getting so excited about this. come Monday it is really going to dominate chatter and change the conversation in a big way. Thompson made a number of nuanced points about Apple Watch — the battery life will depress it out of the gate, but Apple’s core audience will give it enough lift to experiment. Thompson also pointed out that, just like the iPod was a very visible device to others, many people will see others with the Watch and start looking at it, start thinking about buying on. It will foster curiosity. The Apple Watch will also help Apple leverage its various APIs like HealthKit, CarPlay, WatchKit, etc.
  • Global battlegrounds: Thompson remarked the Chinese companies will own China, and Apple will do well there, too; while in the U.S., obviously Apple, Google, and Facebook reign supreme. The new battleground for these companies will be in developing countries.
  • On Xiaomi: Thompson believes Xiaomi’s scrappiness will afford it a massive advantage as it figured out a way to bring high technology to even poor geeks in China — not just the upper classes — and that this DNA will afford them the opportunity to expand their reach in China and places like India, for instance.
  • Facebook is the most underrated company in the Valley: Someone asked about Internet.org, and Thompson pointed out just how aggressive Facebook is being in other parts of the world, essentially giving away bandwidth and cutting zero-rating deals with carriers to essentially become the company which controls media consumption, which in turn helps them control advertising. When you think about it this way, it makes $200b as a market cap seem small for $FB.

Thanks again to Ben for sharing his thoughts so openly, to GGV for organizing and hosting, and to all the guests who showed up for a great evening.

Market Resiliency and the Spector of Exogenous Shocks

There’a a lot of bubble talk again. I’m so confused now I don’t know what to make of it. Here’s what I do know: This is a big up market. There’s a lot of money in the angel and seed and crowdfunding markets. Depending on what stats you believe, the number of microVC funds with $50M or less has exploded in the last few years. And, we have all read that there’s more money moving into the late-stage private markets, with institutions like hedge funds, sovereign wealth funds, and all sorts of people clamoring to get a piece in the next Airbnb — including Airbnb.

Yet, on the other hand, we are living in a time of (1) technology proliferating into the real world and (2) the simultaneous development  of groundbreaking platforms….we all know this, but consider that mobile phones are making the largest market the world has ever seen; or that Uber, Snapchat, and Apple’s iOS ecosystem and mobile efforts are pushing technology out into the real world, all around the Earth; and that besides mobile computing spreading with better and fancier sensors, we have drones (an estimated $100B market over the next 8-10 years); innovation in financial technology and automation, like the Blockchain, which despite the ups and downs, could be incredibly disruptive; we have crowdfunding across a number of verticals. I could go on and on.

I personally tend to agree w/ Albert’s assessment, here. I’ll quote his closing paragraph:

Because [this period of private growth] is happening gradually and because the logic looks internally consistent (and add to that the low interest rates), this could continue to go on for quite some time. This strikes me as the classic case of Nassim Taleb‘s point about fat tailed distributions where it is the higher order moments (kurtosis) that really matter. So the process looks very smooth and gradual for quite some time until there is a sudden and fairly violent swing.

All this said, we are all analyzing what we know. What about the unknowns. What about an exogenous shock to the system, even if the system is resilient? I know we cannot predict that, but it is a part of life, and any analysis should also include those potentially known unknowns the exogenous shocks:

  1. Geopolitical, general unrest could foment in parts of the world as it has for the past 4-5 years. To date, the U.S. has been isolated from this.
  2. Macroeconomic, like how the price of oil just dropped. People say “the macro” doesn’t affect technology innovation, and that is true, but it does affect capital markets, and that could have an impact on crowdfunding, smaller funds, and IPO markets.
  3. Natural Disasters, a calamity on the scale of Sendai/Fukushimia (let’s hope not) on the west coast would rattle business as usual.
  4. Adjacent Bubbles, such as student loan debt could mount and cause instability in other financial institutions.
  5. Shifts In Power, as in what we will have next summer in America, leading into the 2016 election.
  6. Loss of Public Market Confidence, Albert commented back on Twitter that it could also be a few public companies which slow growth and perhaps even stall that triggers this, so we have another possibility.

 

The Story Behind My Investment In Getable

“Consumerization of the Enterprise” is one of those phrases that now feels old, in part because it was used so much without real examples. That was then, and this is now — we are now starting to see enterprises adopt design-oriented products like Slack and Zenefits, to name a few. Looking back now, it shouldn’t be a surprise that products designed with principles to suit everyday consumers are preferred by workers at larger companies.

This got me thinking — what about other prevalent consumer business models today? Could concepts like “on-demand services” or “collaborative consumption” take root inside older, larger, perhaps stodgier, less sexy industries? I wrote about this with respect to on-demand services here. While I didn’t find many on-demand services with consumers as the end customer (except for Boomtown), I did start to see some interesting companies in the sharing economy, but now applies to other industries, specifically related to industrial equipment.

Growing up studying economics, textbooks beat into your head that western economies were stronger in part because they were fueled by consumption. Buying things drove GDP, and that had a strong, trickle down effect. Then, 2001 and 2008 happened, and went the tide went out, the people (and industries) who were naked had to scramble to find new places to eek out efficiency and lower their own operational and capital costs. We’ve seen what’s happened to consumer markets, with the success of companies like Airbnb (full list of “sharing economy” companies on AngelList) — so, can larger industries benefit from the trend?

What I found out is: Yes. The first company I found is Cohealo, based out of Boston. When I found them and finally met them, they’d already well passed me by as an early-stage investor, and they’re well on their way to the big time, helping hospital networks share their high-end equipment which requires high, upfront capital expenditures but often just sits around waiting to be used. Cohealo found the white space between centers which own these and those which need them, and now the sky’s the limit for them.

The next two companies I found, I invested in them. The first is Asseta, which provides an aftermarket for industrial parts for semiconductor companies, a capital-intensive business which Asseta helps provide more financial efficiency.

And the second company I found was Getable. There’s a fun story behind it. I had been tweeting about this subject after posting about it, and Kevin from Getable jumped into the conversation. I knew construction, like medical equipment, was a huge industry ($40B+ industry), big enough for a concept like sharing to pervade. It took a while for Kevin and I too schedule our meeting to talk more about this, and I had no idea how they were doing as a company. Finally, Kevin called me to apologize he had to cancel a meeting because they were just about to close a round — and, the light went off in my head.

“Can I invest, too?”

Kevin was busy as a co-founder dealing with the round, but he took my request seriously, checked out my references, and after a few weeks, managed to make a bit of room for me in the latest Series A round that was announced in February. I had a bit of time to really dig into the Getable’s metrics, which now already services more than 50 construction companies across 250+ job sites, process over $3M in construction rentals (saving on average over 20% for companies), and also driving over $20k in sales to suppliers who join the Getable network.

So, where do I send the check again?

I am grateful to Kevin for taking my call during a stressful time and taking the time to read my posts on the matter. In return, I am now allowed to invest alongside a great syndicate which led Getable’s Series A as the company marches further into a massive industry ripe for new technologies and new business models. Finally, it’s worth noting I wouldn’t have arrived at Getable if I didn’t see the concepts take root among consumers and then, write about them here on my blog. The writing helps reinforce what I see taking place, and then helps me connect with new friends like Kevin, and those connections lead to things that I couldn’t have planned with any grand strategy. That feels good.

Catching U.S. Enterprise & B2B Unicorns

Disclaimer: This list is not likely complete nor precise. Please read on: A few weeks ago, I looked at U.S. consumer unicorns and scraped public databases (imperfect sources) to find which institutional investors got into companies that would eventually turn out to be worth over $1 billion. Specifically, I looked back to 2008 and tried to find funds which invested when the company was valued at or under $100m. These are just arbitrary parameters.

Now, I’ve done it for enterprise/B2B companies in tech which have started in 2005 or after in the U.S. Note, there are more of them, but the total enterprise value of these companies added up would still be dwarfed by what has happened in consumer services. Again, please note the data isn’t 100% precise, so if you see an error or omission, please just tell me and I’ll fix it. Also, some of these companies have ballooned above $1b (like WeWork), so while the pre-$100m rule doesn’t apply exactly to that company, I kept it the same here — I don’t know IRR but safe to say some of these firms have outsized returns on just one investment, so congrats to all who made the list.

Palantir / Founders Fund
Square / Khosla, SV Angel, First Round Capital
WeWork / Unknown
Cloudera / Accel, SV Angel
Pure Storage / Greylock
WorkDay / Greylock
Nimble Storage / Lightspeed, Accel, Sequoia
inMobi / Sherpalo, Kleiner Perkins
Nutanix / Lightspeed, Khosla, Blumberg
Magic Leap / Unknown
MongoDB / USV, Flybridge, Sequoia, Intel, In-Q-Tel
DocuSign / Century, Westriver, Frazier, Ignition, Sigma
SunRun / Accel
AppNexus / SV Angel, First Round, Khosla Ventures, Coriolis
Automattic / Polaris, Radar, Blacksmith, CNET Networks
Slack / Accel, SV Angel, Andreessen Horowitz
Actifio / North Bridge, Greylock, Advanced Tech Partners, Accel
AppDynamics / Greylock, Lightspeed, Kleiner Perkins
CloudFlare / Pelion, Venrock, NEA
Eventbrite / SV Angel, SoftTech, Sequoia, DAG, Tenaya
Credit Karma / Felicis, SV Angel, FF Angel, QED, Founders Fund
Qualtrics / (none)
Shopify / Bessemer, FirstMark, Felicis, Georgian
Box / USVP, DFJ, Scale
HortonWorks / Benchmark
New Relic / Benchmark, Trinity, Allen & Co, Tenaya
Stripe / YC, Sequoia, Andreessen Horowitz, SV Angel
Lookout / Trilogy, Kholsa Ventures, Lowercase, Accel
HootSuite / Leo Group, Blumberg, Hearst, Millennium Value Tech Partners, OMERS
Palo Alto Networks / Greylock, Sequoia
Apptio / Greylock, Madrona, Shasta
Meraki / Felicis, Sequoia, DAG, Northgate

Mention frequency > 1 are: SV Angel (7); Sequoia (5); Lightspeed (3); Greylock (5); Accel (3); Khosla Ventures (3); Kleiner Perkins (2), Blumberg (2); Benchmark (2); First Round (2); a16z (2); Felicis (2). Note, also, that many YC companies focused on B2B like Zenefits and Optimizely on their way to the billion dollar mark, so if you have suggestions there for a “too watch out for list,” I’ll update this. And, as they say, once is lucky (but still awesome), two is good, and three a pattern.

Investing Pre-YC

Being a new, inexperienced, and small investor, I really have to “take what the defense gives me.” Put another way, I am often forced to look in areas and stages where more professional investors wouldn’t go. Sometimes I ride along and go late, but lately, I’ve also been going early, and one of the things I try to do in these cases is see if the company has what it takes to get into Y Combinator in the next 3-6 months. Here, I help them prepare.

People may think of Y Combinator as a startup incubator, and in some cases it can be, but it’s really a startup selector and accelerator. And, over the past two years, it has quietly been moving upmarket, as well as growing in absolute size. This means on Demo Day you can see three companies in a row present, where one has zero revenue, one is making about $4k a month, and one is making $350k/month and growing. This distorts the Demo Day vibe a bit (and potentially puts less mature companies in a tough spot), but ultimately, the YC engine is about a huge, smart, network effect and growing. The best startups coming out of there are doing both, leveraging the network for advice and new customers and growing by any means necessary.

Which brings it back to me and Haystack. I love going to Demo Day but it’s also so big and fun and a firehose, it’s hard for me to make decisions so quickly. So, I meet a bunch of the companies earlier, like many others. So, I also try to meet people early who I think have a great idea and incredible drive and who could benefit from applying and getting into YC. I have a company in the current batch I did this with, and while it was a bumpy road, it worked out and the founders are loving the experience.

A final note: I do not have any special ties with YC to help with applications, and this approach doesn’t work all the time (I’m 2 for 3), but I do think it’s an opportunity to find founders who have already started something that’s beginning to work, and a big idea — if they’re thinking about something big, if they’re leveraging their limited resources, and if they’re focused on how to grow, it’s a fair shot to get into YC. Getting into YC doesn’t mean the company will be successful, of course — but the network, peer & time pressure, and focus on growth gives an early company a great chance to get to the next key milestones.

Hacking Mobile Distribution and Deployment via SMS

As someone who worked on consumer mobile products for a good number of years (and who carries the scars of the endless search for mobile distribution), the chatter about new mobile services using text messaging as the interaction layer has been fascinating to watch. Kent Goldman from Upside has some of my favorite tweets about the emergent trend, remarking “Good old SMS is the new UI” and Jonathan Libov of USV had a longer post (click here) about how this trend developed as a UI and where it could go in the future.

With the release of Magic and Luka.ai, why is all of this happening at the same time? When Twitter launched back in 2006, its signature 140-character limit was originally created and imposed in order to ensure tweets fit inside text messages, which were limited to 160 characters. Since then, users could always tweet via text through Cloudhopper by syncing their phone to their Twitter account and texting their tweet to 40404. I still do it often when I’m on the go and don’t want to open TweetDeck but have a question I want to ask or thought I need to share in the moment.

Here’s a brief recap of how we got here:

  • Dearth Of Mobile Distribution Dampens Developer Libido: If you’ve read this blog over the years, I am a broken record on this topic – mobile distribution is so hard to engineer, yet while the overall market size of mobile users creates the largest technology market we’ve ever seen. For an enterprising mobile developer who has tried his/her hands with a few apps only to never get distribution, these conditions can force mobile app makers to look for other ways to capture consumer attention on phones.
  • Global Tidal Wave Of Messaging Apps: We all understand this, I trust — the massive footprint of mobile messaging apps which will eventually turn into commerce, interaction layers, and much more.
  • Avoiding App Store Noise and Taxes: Kent pointed out releasing a service via SMS also allows developers to avoid the morass which are the mobile app stores. This also reduces developer libido, working so hard over an app only to see the store flooded with copycats, black box featuring schedules, and drastic changes in UI which reduce search functionality and browsing. I’d add to Kent’s point that for digital transactions for services rendered through the app, some of these new SMS services could provide a bypass around Apple’s 30% toll in the app store.
  • Reduced Cognitive Load Requirements: It’s hard to design a transactional mobile app where the user doesn’t have to make lots of decisions. Uber is one of the few. But, if I could just text “I want X delivered a bit after 8pm” it’s just easy, and I don’t have to search for an app, open it, wait for it to load, and then find the input areas, etc.
  • Easier User Onboarding: Asking to download a mobile native app has many steps. Find the app. Push button to download and/or use TouchID to verify download. Wait for the software to arrive. Open the app, wait for it to load. Then, sign up, register, perhaps go through a tutorial….ah, screw it, I just want my burrito and some organic juice. Another friend, Robert Stephens, pointed out it’s an easier request of the user’s time and attention, and after a few interactions, an easier upsell to download the native app. But, to start, asking a user to just “Send us a text to 70707 to get started with Sandwich Valet” is a pretty easy call to action.
  • Immediately Cross-platform: Kent also pointed out going text-first on mobile also makes the service omni-platform from Day 1, even for a Windows Phone. That’s a joke. But, not really, think of Xiaomi in China or other OS and app ecosystems emerging. Whereas many startups are thinking about going iPhone-first, some of these new services can service everyone right out of the gate.
  • Conversational UI: This is sort of an aside, but related….My friend Max shared a screenshot of Luka.ai and called it “Conversational UI,” which is clever — delivering a service (in this case, in a mobile native app) in a format where users feel like they’re texting with their friends.
  • Gateway To Mine Our Conversational Patterns: Last year, we started to see apps deployed which mined our emails to build up our profiles and preferences for eventually delivering a predictive or AI-based solution. Like email, getting into our native messaging clients like SMS provides developers another fertile ground for mining our conversational habits and preferences. People have been wondering aloud about “How can Magic scale if humans are providing answers?” and the answer is, often, “AI.” Eventually, machines will be communicating with us, and we will likely not have any idea.
  • Potential Drawbacks To This Strategy: This all sounds great, but what are the drawbacks? It’s hard to build a bond with the user without the mobile app. Not having a mobile app blocks the service from leveraging core phone sensors (mainly GPS and camera). Some commerce functions require a browsing interface or creating a basket of goods, in which case typing out the basket is inefficient. There’s also a business model consideration for services which launch here but are on top of other services — additional tips and fees could conceivably add 3x to COGS of an item’s true cost. And, well, we must only believe it’s a matter of time before Messenger, Whatsapp, Snapchat, Instagram, maybe Twitter, and others do some version of this, too, inside their own “chat” experiences.

Which Funds Catch American Unicorns Early?

Like everyone else blabbering on about unicorns, I catch myself reading the posts, too — and many LPs I talk to often just want to know, “How many unicorns do you have?” I’m partially joking, but it’s directionally true. These are the companies which drive the outsized returns. However, I wanted to ask a slightly modified question and see what public data sources would reveal. I wanted to focus on America, on consumer companies that have grown to a $1Bn of private market value since 2008., and specifically on the institutions which were able to invest relatively early — not later stage investors. Here’s the list I came up with, based on a conversation on Twitter. (Disclaimer: Please let me know if I missed any company or fund, happy to amend this!)

Since 2008, the following consumer-facing companies (U.S. HQ’d only) have been formed and reached a private market valuation of at least $1Bn. I’ve also included the only the institutional funds (even if small) who were in the round before a $100M pre-money valuation, give or take, based on public sources — note, 1) I may have not listed a fund, so please correct me if I need to, and 2) I am not listing individuals:

Uber / Lowercase, Benchmark, Structure, Founder Collective, Kapor, First Round, *AngelList
Pinterest / Bessemer, FirstMark, High Line
Whatsapp / Sequoia
Instagram / Baseline, a16z, Benchmark, Lowercase
Waze / BlueRun, Magma, Vertex
Oculus / *Kickstarter, Formation8, Spark, Matrix, Founders Fund, Big Ventures
Nest / Shasta, Kleiner Perkins
Tinder / none (*Benchmark now on BoD)
Living Social / Revolution, Grotech, USVP, Lightspeed
Groupon / NEA, Accel, SV Angel
Houzz / Advent, Sequoia
Square /
Khosla, First Round, SV Angel
Snapchat /
SV Angel, Lightspeed, Benchmark
Wish /
XG Ventures, Caffeinated, Felicis, Digital Garage, CRV, AME Cloud, Formation 8, GGV
Instacart /
Y Combinator, Khosla, Canaan, Sequoia, *Funders Club
Tango / Hambrecht

Assuming this list and rundown is true, what can we glean from it? Well, no surprise, Benchmark and Sequoia are both early and swinging big; First Round and SV Angel caught a few, as did Khosla and Lowercase, then there’s actually plenty to go around for the rest, as many firms have one — and two companies above were actually part of crowdfunding platforms (while one was on Kickstarter, but no equity was sold there). Finally, consumer is what grabs everyone’s attention and what the tech and popular media focus on, but relative to enterprise & B2B startups, there are just fewer consumer companies (16 since 2008, by this case in the U.S.) that reach $1B status — however, the total market cap of the consumer companies is much larger, hence our collective obsession and fascination of tracking such things. Oh, and LPs care, too ;-) By the way, if I only started counting from 2010 onward, the list for consumer would drop from 15 to only 10, and a good portion of them have been acquired already. Of course, there are many more in the pipeline, and if I checked on this list in a year, there will be more.

Sources: WSJ; Crunchbase; Fortune.

Haywire is written by Semil Shah, and is published under a Creative Commons BY-NC-SA license. Copyright © 2015 Semil Shah.

“I write this not for the many, but for you; each of us is enough of an audience for the other.”— Epicurus