These days, it’s easy to start a company — and it’s hard to build one. And, we know 90% of new ventures don’t ultimately work out. We all focus on the growth and momentum, the outliers and the high-fliers, and for good reason — those outcomes end up “covering” the rest of the table. When things don’t work out, investors know it’s coming, but no one can say anything. It’s not our story to tell. And despite what we read in Medium post-mortems, there is not a uniformity of action and integrity when the founders of a failed newco wind things down. A dream passes away and across one’s mind while one signs paperwork and answers the same questions over and over again.
I wanted to highlight that, in these moments, not everyone acts out the finale of the play. Sometimes, folks can’t bear to go through the motions. In some cases, one can understand. But, there are some who wind down their dreams with class and grace. They did this specific work not because they have to or are obligated — they actually wanted to finish the work.
“Finishing the work” is part of the journey. Recently, I have had a front-row seat to founders I worked closely with who all have impeccable credentials, resumes, drive, professional backgrounds. They didn’t raise too much money. They didn’t seek unreasonable PR coverage. They didn’t go to parties or show up at random meetups. Their products and services reached their intended target customers, just not with the velocity and scale required to warrant more serious funding. That is not to suggest value wasn’t created — it was, and a few of them were able to obtain acquisition offers from well-known companies.
Watching these founders — in this case, folks I considered friends — finish their work was painful to just observe. It took a lot of time. They weighed the considerations of all stakeholders and felt personally responsible for families of their colleagues. It is hard to concentrate on other matters, and finding a “home” within a larger company is no cakewalk. It can be pretty brutal, actually, and often it’s just not that urgent for the larger company. Some of you who’ve gone through it know — but we will see many, many more go through this as the bloated funding rounds of 2014-15 reach their final dollars and runway.
I only know my portfolio. Many have “finished the work” quite valiantly. Some have disappeared, and I do understand why. Most recently, I wanted to single out friends Victor Echevarria, Tad Milbourn, and Alanna Gregory as founders and CEOs who unapologetically came up short of their vision but finished the work they started with grace. Each of them, for months, initiated new meetings, lobbied for employees, communicated with investors, never once complaining. They will be different people after this part of the journey, no doubt about that, and they will have built new muscle to arm themselves for the next journey.
I’ll end by repeating a line from above, with emphasis: “They did this specific work not because they have to or are obligated — they actually wanted to finish the work.” Thank you.
Sometimes, picking a company to invest in is just easy. The hard part is getting in.
About two years ago now, I met Jason Boehmig of Ironclad during YC’s Summer 2015 batch (before Demo Day). One of my founders who was in YC singled out Jason as outstanding. Jason’s pitch was exactly what I love to hear, paraphrased: “I was an attorney (at a prestigious Valley fund). I taught myself to code. I quit my job. I founded this company to bring systems intelligence to the legal department of enterprise companies and beyond.”
I had to pitch Jason to let me in and also to make a gracious consideration for me.
I started to help Jason with his round immediately and got working some customers. Jason put me to work right up front but he was easy to work with. In fact, I would say he’s one of the most organized founders I’ve seen — his emails are clear, instructive, and written as if a lawyer, programmer, and BD rock star were mashed into one person. At the time when he was raising, I was just starting my current Haystack Fund #3, and my wife was nearly 9-months pregnant – with twins. I needed to close my fund, tend to my family, and wire money I didn’t have. I explained the situation to Jason over email. Like a true gentleman, he listened and made the accommodation for me. It was a small gesture and not much money at the end of the day, but in the moment, it was stressful for me and Jason assured me it was all good.
It’s those kind of interactions which keep my interest focused on being an early investor and building early relationships with founders. In the months and years that followed, Jason would skillfully pump my network for customers. He sent the best email updates every month, and absorbed tough feedback like a pro. He always wants to get better and to learn, and that ethos is embodied in the Ironclad product and the Ironclad founders and team. And, it is that ethos and relentless drive which attracted the former head of Salesforce’s AI efforts, Steve Loughlin, to lead the company’s Series A from his new role at Accel Partners.
Jason’s true colors showed again during the Series A process. I had a front row seat. No surprise, Jason and team referenced incredibly well. He handled each interaction like a professional and I am sure he’s already on the Series B radar of other firms. I was fortunate to get to invest again in the A, and I know Jason will be calling on me for even more introductions. And, customers will be lining up. The legal department of enterprise companies remain one of the last open space in SaaS, and the Ironclad team will now barrel ahead with even more ammunition.
About a year ago, a few ex-Box friends mentioned one of their colleagues “Ted” was starting a new company. That was enough for me to swing into action. I googled around and targeted “Ted Blosser,” found we had a few close friends in common, and a few email requests later, found myself sitting in his makeshift office near Facebook HQ. In the first meeting, it was clear that Ted was driven, had a vision for the product he wanted to build, and took a sober approach to testing and refining his hypotheses as he built.
We talked about general investment strategies, not related to his company, “WorkRamp“, and I liked Ted so much that I offered to start making customer introductions for the product. Generally, I like this way of getting to know a founder and product. I prefer to make introductions in advance of investing so I can build up a rapport with the founder, see how they leverage my network, see how they communicate, see how they use persuasion techniques, and so much more. Ted passed with flying colors.
Ted decided to raise a smaller round to start and luckily I received a call to participate in WorkRamp’s first round. I accepted and Haystack is a proud early investor in the company. Fast-forward to today, WorkRamp recently announced “The Work Room,” its platform play to connect employees with product leaders at other companies, such as Airbnb, Uber, and others. The ultimate goal is to help drive the democratization of all that expertise into a training platform for WorkRamp customers. It’s been great to see Ted and his team move so quickly in this emerging space. As new and growing technology companies hire more people quickly, traditional learning management systems aren’t equipped to help new recruits get up-to-speed on how the most cutting-edge companies are run. A marketplace model is the perfect solution to getting the right information from the right minds into the right hands. Keep an eye on Ted and the WorkRamp team — they’re knocking down customer targets left and right, and it’s been fun to watch.
As I began to raise my first fund back in early 2013, I reached out to my friend Satya to see if he’d like to make a small LP investment. We met up in The Mission and I walked him through what I was trying, and he said he unfortunately couldn’t and it was related to something new he was doing with his old friend. He couldn’t participate and share more details about his new thing. It was too bad, but I understood, and was now curious what new company he’d start so I could invest! Fast-forward a few weeks, and he sent me a note right before the news about Homebrew hit. “Ah….so that’s why!”
Always looking out for those around him, I began investing and Satya was kind enough to share a new deal he was working on with Homebrew. It was there that I mean Sean Conway and his company, at the time called “Airenvy.” Back then, Sean’s vision was a bit different, but he was operating in the same market he’s in today, and it’s a big and rapidly-changing market. From the first minute of meeting Sean, it was crystal clear he was a sharp communicator and extremely self-driven. He also had a chip on his shoulder about his previous company. I was invited to the round led by Homebrew with a small check and was happy to sign along.
When I started investing, it seemed like Series As just happened right after seed. That’s not the case anymore. Sean and “Airenvy” (now the company is called Pillow) kept chipping away at their market and embarked on a journey to find the right fit within that market. If you read this piece about what is motivating Sean and his team with Pillow, you will see the deeper motivations that drive the company. It was that motivation and perseverance which propelled Pillow and Sean to raise a hard-earned Series A round from Mayfield last year (with friend Tim Chang joining the Board), which was only just recently announced here.
A theme which has been reinforced for me in the last four years of investing is that the people don’t change much — the products and services in the market, however, will certainly. When I first met Sean, the company then “Airenvy” had a different approach. In building his team and the company into Pillow, they all went on a journey into the market to see how the next generation wants to live. And, that’s where things get interesting — with Airbnb growing, with urbanization growing, and with housing prices in those urban centers growing, the next generation coming up may choose to live differently. That’s where we see the next innovation, with home-share networks like Common and Homeshare, among others. It’s in that world that Pillow found opportunity and launched “Pillow Residential” to build software, workflows, and tools to connect apartment owners with renters. It was a journey itself to discover the opportunity in the market. And, as I alluded to, the market changed and Airenvy changed (into Pillow), but Sean as a leader didn’t change. Satya as a friend didn’t change. They’re still the same people searching for and sharing opportunities with folks like me when I was starting out.
Back in Q1 of 2016, when the technology sector went through a sizable (but apparently now forgotten) correction fueled by sharp hits to public tech stocks, I was happily investing into the very early-stage ecosystem, and in particular, deeper technology opportunities. It was at that time when my friend Julian introduced me to Grant Jordan, a co-founder of SkySafe.
I looked up Grant’s background and read up on his work. I was 90% convinced to invest in him after a bit of online sleuthing. In the first few minutes of meeting Grant, the decision was made. Grant’s industrial expertise was off-the-charts and focused in such a way that his approach to SkySafe became, literally, a no-brainer decision. Grant had grown up as a computer tinkerer, to put it mildly, studied CS, security systems, and EE at MIT, went on to work as a core engineer at Wright Patterson Air Force Base leading a team tasked with finding 101 ways to take down enemy UAVs of many shapes and sizes, parlayed that into a consulting firm with some of his colleagues — and now some of those folks have joined him to form SkySafe.
By now, you’ve likely heard of the various methods by which startups are trying to help others stop rogue drones. There are drones which will attack other drones, or drones which shoot out nets to capture other drones, and on and on. The problem is very real. On the battlefield, terrorists are outfitting off-the-shelf drones and weaponizing them with aftermarket upgrades. As the drone industry grows, we will see more flying above us in public spaces. It will go so far as testing the airspace regulations we have, as well as privacy rights citizens have.
Grant and his team have a unique approach to this emergent issue with SkySafe. The company’s technology is defined by radio frequency signals which are intelligent enough to detect rogue drones and force them to either leave or to land while permitting approved drones to continue operations. To hear Grant explain it, it’s the stuff of sci-fi — SkySafe’s systems reverse-engineer the communications and telemetry links unique to each model of drone and using electromagnetic pulses to disable the drone.
Wow, where do I send the Haystack wire?
I was fortunate to be a part of SkySafe’s seed round, which was led by a16z. Now, a16z is tripling down on Grant and his team with a new Series A announced a few weeks ago. While the near-term focus for Skysafe will be on defense applications — they are working specifically with the Naval Special Warfare unit and the SEALs in particular — the future will be marked by protecting public spaces and even private spaces. In a world like that, it’s good fortune for Haystack to be involved with SkySafe and to play a small part in bringing this technology from the battlefield to the world at-large.
It’s that time of year, when Connie Loizos of StrictlyVC takes off in search of east coast summers and long walks on the beach — leaving StrictlyVC’s readership without its veritable columnist and correspondent for a few weeks. While Connie’s work and voice cannot be substituted for, I am excited to get back at posting (and writing more frequently on my site, as well) this summer.
Earlier this year, I took the opportunity to pose a Q&A of a number of limited partners (LPs) in venture funds about a series of questions (see here for those). This time around, I wanted to pursue a set of Q&As with folks who have founder VC firms as well as founders of startups. Specifically, the founders of startups will talk about how they were able to secure Series A funding and the lessons they’ve learned about fundraising along the way. The founders of VC firms, by (slight) contrast, will walk us through the details of how they raised their first fund and the lessons they’ve learned along the way.
My hope with this summer series is to shine a light on lessons directly from practitioners about how they got their funds off the ground and how company founders were able to secure institutional financing. We won’t be posting these every day, and I may lob in a column or two if I’m able to collect my thoughts by then. This year has been one in which I haven’t tweeted or blogged as much. A lot of this is related to travel and work, and I hope that will change very soon. Stay tuned, and Connie — enjoy the beach!
Almost three years ago now (summer of 2014), a friend said I should spend some extra time looking at a new small company that had formed out of Stanford. I remembered seeing the company at Y Combinator’s Demo Day in August 2014. The presentation was memorable for the scope and clarity of the company’s mission. I got the introduction to the founder and back-channeled him a bit before meeting — everyone I talked to didn’t just say he was smart, they all paused and said something to the effect of, “No… I mean, he’s different. He’s really, really smart.”
Those endorsements became quite evident when I met Juan Benet. You can read about his background here, or even more interesting, I’d encourage you to watch some of many his speeches and lectures on YouTube here. After meeting Juan the first time, I wanted to invest. Looking back on the email chain we had back then, he was incredibly gracious, flexible, and patient with me. However, while I knew I wanted to invest, I didn’t fully understand the scope of his mission at that time. In a somewhat embarrassing (yet recurring) request, I asked to invest, but also that we meet again and that he help me understand the real drivers behind Filecoin, IPFS, and his vision.
At that time, I had been reading up on Bitcoin and the blockchain, I’d held a decent little chunk of BTC personally, and I had invested in Gyft, which leveraged Bitcoin to help with overseas payments (and was eventually acquired by FirstData), and I had invested in Chain, which is building enterprise-grade blockchain infrastructure for the financial services industry (and is one of the leaders in this category in the financial services world), and I had invested in SFOX, advanced trading platform for professionals to exchange cryptocurrency (which is on fire right now, too). Also at that time, I started writing more about the blockchain and how venture investors could play in this space. You can read that primer here. And, since then, Bitcoin hit its own “Crunch” and then came back to life. Ebbs and flows.
While I was following my interest and trying to educate myself on the business implications of a blockchain, it was Juan who opened my eyes to how some of these new startups — new Internet protocols, really — could actually rebuild and reshape how information is stored, retrieved, and moved across the Internet. What if the web was designed in a manner such that applications didn’t need to be centralized? What if control and decisions could be both distributed and live on the edge of the network? What if scarce resources could be mined, discovered, and added to the network, creating incentives for new participants to engage, lower costs across the board, and improving efficiencies along the way? Juan patiently explained to me, in lay terms, how a distributed system architecture was his ultimate vision and a future he was passionate about building.
I won’t try to explain all the intricate details of what Protocol Labs is building with Coinlist (the exchange for pre-ICO offerings, in partnership with AngelList), or with IPFS, aka Inter-Planetary File System (the open source project which oversees a content-addressable, peer-to-peer hypermedia distribution protocol), or with Filecoin (Protocol’s forthcoming token that will be issued to incentivize storage on the IPFS network), but you can click on the links here to read more about them. And when it comes to the long-term implications of Protocol Labs, I would simply point to this elegant post by USV’s Brad Burnham, who is an investor in the company and advises them closely. It is simply exciting to read Brad’s post and ponder the massive potential this technology and network holds.
I am fortunate to be a small early investor in Protocol Labs. Juan was gracious in teaching me about his world. Reflecting on this investment, I’m reminded of a theme which seems to recur for me in this world of technology investing — it is the founders who generally tip investors off about the future — not the other way around. While I was somewhat prepared to meet Juan back in 2014, I hadn’t yet been exposed to the type of company he was trying to build. I had to gain the conviction in real time, and lucky for me, I trusted my gut and my network and went forward.
Years ago, when I was working at a startup, I made my first trip down to SXSW. It was a blast. That weekend, I happened to stay in a house along with a bunch of folks from Disqus. I knew Daniel, the founder, a bit from before, as most people writing blogs online knew and respected Disqus. Daniel was in Austin with some of his team, including Mat (now at Slack), Tyler (now at Bebo), and Ro (the founder of CARMERA). We had a blast that weekend and those folks from Disqus were both gracious and a lot of fun to hang out with.
Fast-forward a few years later, I stayed in touch with the team from that trip. Though I haven’t talked to Daniel or Mat in some time (Hello, guys!), I did spend time with Tyler as he was thinking about his next moves. And, I was fortunate to get a phone call from Ro as he was thinking about his next startup — which happened to be in a totally different industry.
I told Ro that I wanted to invest in whatever he was doing, within reason. (I would’ve done the same with Tyler, except he was in the healthcare space, which is an area I haven’t invested in at all — I think that highly of Tyler.) I met with a Ro a few times and, as is the case with most investments, he opened my eyes to a new emerging trend that I hadn’t been exposed to — V2V, or vehicle-to-vehicle communications. At that time in 2014, while I had heard of Veniam and met the founder, it didn’t intuitively occur to me that moving vehicles would not only communicate with the cloud, but that they would also communicate with other vehicles because decisions would need to be processed locally. Of course, now with hindsight, that is obvious.
Ro and his team formed in NYC and went into stealth mode with CARMERA. I was lucky to be a very early investor in the seed round along with folks like Resolute, Notation, and Jud, among others. Later on, they scored a fantastic Series A round from Matrix, with Hardi Meybaum from Matrix joining the Board of Directors. (If you want to read more about the company, also see Erin Griffith’s piece in Fortunehere.)
I could go on and on about why CARMERA is a fascinating plan in the burgeoning landscape of autonomous vehicles, but in this case, I would encourage you to spend time on their website: https://www.carmera.com/ I would say their website is one of the most unique and creative and informative startup websites I’ve seen today.
Finally, my seed investment in CARMERA is yet another example of how venture investing as I hope to practice it is a “people flow” journey — not a deal flow business. It is one of the many things I’ve learned by watching a great investor at work. I am grateful Ro and I became friends years before he started on this journey, and I am thankful I get to go along for the new one.
On June 6th, I may break an Internet record — or, at least, try to. Next Tuesday, I will participate in three (3) separate, live “AMAs,” also known as “Ask Me Anything.” I have done of few of these already, and as someone who loves good questions and likes to quickly type out answers (or opinions), I’m excited for this back-to-back-back session that’s coming up. As with any AMA, I don’t really have any agenda other than to be in the moment, share a raw point of view, and ride the wave of random questions. Here’s the schedule if you care to follow along or submit any questions in advance:
** UPDATE ** I’ve added links to each specific interview posted on StrictlyVC with each of the LPs:
-Sarah Anderson @ Cintrifuse – click here
-Susan Chen @ UTIMCO – click here
-Atul Rustgi @ Accolade – click here
-Amit Tiwari @ INVESCO – click here
-Hunter Somerville @ Greenspring – click here
As longtime readers may recall, for the past few summers (2014, 2015, and 2016) when Connie Loizos from StrictlyVC takes off for a few weeks in the summer to meander around coastal Maine with her kids and family, I get the lucky opportunity to write some columns and share some interviews in her absence. This year, like the recent heat wave, the summer will arrive early — starting this Friday and for the week of Memorial Day, I will step in for Connie and share some Q&As with folks from the limited partner (LP) community — the money behind the money of VC.
From what I gather (as I haven’t been investing too long), the LP community was typically a quiet crowd, rarely making public statements or sharing their views openly. That has certainly changed in the short time I’ve been investing. Now LPs blog, tweet, share videos, speak at conferences, and even start directly investing in companies, on occasion. I reached out a small handful LPs I know personally and invited them to participate in this special series — while some politely declined on account of their investment group’s unstated rules of remaining out of the public eye, we were lucky enough to recruit five (5) LPs to share their views on five (5) different questions, with each LP receiving the same question. The group of five LPs composes of four (4) Fund of Funds, which aggregate capital to invest in VC and PE funds, among other types of funds, and one (1) university endowment; there are two (2) women among the group, as well. Each LP will share their views about their current view of the Bay Area ecosystem, how LPs are investing directly into companies, how they monitor VCs on social media, and much more. [Please note that I do not personally have a business relationship with any of the LPs who will be in this series.]
As a newer investor trying to learn, I find this trend of LPs sharing their views and being more public as good for the ecosystem. I believe founders should have a better understanding of the source of where the money comes from — this isn’t to say that they should delve too deep into it (it’s not that exciting!), but I believe it’s important to never take for granted where the money does come from. I want to support efforts to shine a spotlight on LP thinking, such as the podcast series by Notation Capital (“Origins”) or when Harry Stebbings (“20 Minute VC”) has an LP on his show. I’ve now followed and interacted with a small handful of LPs on Twitter over the years, as well, and many of them have gone out of their way to help me get better at what I do. So, thanks to all the LPs who participated in this mini-series (which starts this Friday, May 26), and to Connie, who gets a well-deserved break a bit earlier this year.