Venture Capital Archives

Recap: StrictlyVC’s “Insider Series” (May 13)

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Last week, StrictlyVC with it’s chief exec Connie Loizos held it’s second “Insider Series” event on May 13 @ Galvanize in San Francisco. It was packed. Connie’s audience is growing and growing, and it’s been a blast to see people anticipate the events and reconnect with old friends and make new ones at these events. I suspect there will be more and more to come, and I’m excited to be a small part of it.

For this recent event, it was packed with content: Connie opened evening by chatting candidly with Tom Fallows, formerly the head of Google Shopping Express, and now the Director of Global Expansion Products at Uber (Connie’s write-up here); then I chatted with Dan Morehead of Pantera Capital in a more technical discussion of the Bitcoin and blockchain market, startups, challenges, and opportunities (Connie’s write-up here); this was followed up by Charles Hudson in conversation with Thumbtack’s CEO Marco Zappacosta alongside his VC board member, Sequoia’s Bryan Schreier (write-up); and the night ended with Connie again talking to Lightspeed’s Jeremy Liew, who was remarkably thoughtful and candid about the limitations of VC in today’s age.

Thanks to everyone who showed up, here are pictures from the official photographer, pencil in September 17 on your calendar (no promises!), and if you haven’t already, make sure you’ve signed up for the StrictlyVC email list here:  http://www.strictlyvc.com/signup/

Video: If Seed Is The New Series A, How Helpful Are Angels?

Back in April, I drove over to Oakland for Bambi Francisco’s Vator Splash to sit down with good friends Renee DiResta and Jonathon Triest about the current state of angel rounds and “pre-seed” funding in and around the Valley today. I knew this would be a fun panel because I’ve known Renee for years and I text with JT about 100 times a day. I love both of these people. And, they’re scary smart about spotting opportunities and reading people. In this chat, the three of us talk for about 20 minutes. I would encourage early-stage founders and investors to play the video and listen in the background. Myself, JT, and Renee invest as the first checks in a company, oftentimes well before the seed firms you’d recognize jump in. “Pre-seed” is now a whole new category, and this is a great discussion to gain more context around it.

Contest: On-Demand Startups, But For Enterprise/SMB

In conjunction with The On-Demand Conference we are hosting on May 19 in San Francisco (tickets here), we are also pleased to announce a contest associated with the conference. Specifically, we are asking for submissions for “on-demand” startups that meet two clear conditions: (1) the end customer must be a business or entity, not individual consumers; and (2) the company shouldn’t have raised “institutional capital,” meaning it’s OK to have angel/seed money but not mega dollars from a VC firm. The winner of this “Call For Startups” will be presented with the opportunity to present their company on-stage during the event, and the top (5) submissions overall will be given free tickets to attend the event.

I’m a strong believer that concepts which work for consumer behavior (sharing, on-demand, collaboration, etc.) will create opportunities for entrepreneurs to bring those concepts to models where the end customer is not a person, but rather a business or entity. This has fortunately led me to investments in companies like Getable and Boomtown, among others, and I hope many more. Read more about the contest, and please apply if you’re eligible. Click here for more details.

On-Demand Conference: Line-Up, Agenda, and Few Tickets Remain

About a month ago, we announced The On-Demand Conference (May 19 in San Francisco) in this post (tickets):

After a few months of planning, I wanted to write a short update to highlight who will be represented. We aimed to make this conference inclusive as its a very competitive space, and we aimed to make the content be the main attraction. The conference is designed for founders, operators, investors, and journalists to get a deeper view into the operations, challenges, and opportunities in the growing on-demand sector:

  • Transportation: Uber; Lyft; Shuddle; Luxe; Zirx
  • Food: Sprig, Postmates; Instacart; Munchery; Caviar; DoorDash
  • Consumer Services: Shyp; Homejoy; BloomThat; Alfred; ClassPass
  • Business Services: Managed By Q; Checkr; Onfleet; PlaybookHR; Directly
  • Media: Re/code, TechCrunch, Bloomberg, StrictlyVC, Fortune.
  • Investors: Satya Patel, Shervin Pishevar, Simon Rothman, Steve Schlafman

Wow….what an amazing set of companies, CEOs, operators, journalists, and investors — and I know not every company is up here and i wish we had more space and time. Please know we tried our best to balance all the requests, and there are great companies and ideas we just didn’t have room for. Maybe next year will be two days! On-demand for food, but also help desk tickets for customer service. This will be the premier conference in what is arguably the biggest driver of consumer behavior change today. Additionally, there will be many companies and investors in the audience (we see the registration logs, of course!), so if  you’re in the space or thinking about breaking in, buy a ticket while you still can, click here to register.

The Story Behind My Investment In Onfleet

Yes, the company name is Onfleet, not “On fleek,” though they are actually are “On fleek” when it comes to providing platform services and routing infrastructure to the on-demand economy. I could bore you with stats such as powering volume growth at a 30% month by month rate (40% scheduled, 60% on-demand), or how they’re growing B2B revenues by 35% per month, but that’s par for the course these days in SaaS.

The interesting part of the story is how I met Khaled, the CEO, and how I came to invest in the company. @Rafer, for those of you who know, is a friend and tireless supporter of the early-stage companies he fosters. Onfleet is one of those. Back then, in April 2014, the company was called “Trak,” and the founders had recently left Stanford and started their entrepreneurial journey.

At the time, I was writing about the on-demand economy and making a few investments in companies like Instacart and DoorDash. Rafer figured I should meet Khaled, and while I liked him initially as a person (we had a great first conversation), I wasn’t sure I wanted to invest because I didn’t feel a personal connection to the company. My first impression was Khaled was too reserved, but I came to learn letter, I misinterpreted that first meeting. We stayed in touch after I said “no,” and in fact, we discussed this very point. It’s not an easy conversation to have, and who I am to make such judgments.

To his credit, Khaled heard me out and, despite that, asked me very nicely for help in getting the story, pitch, and details together — and so I did, as a friend. He responded really well, and over the next few weeks, we traded a ton of emails, texts, calls. Three months in, Khaled was rolling in his round, and he called me up again — asking me to come on board. Now, looking back, I was lucky I got a second chance to invest, and I took it. Khaled has really grown and matured as a technology and operations CEO, building a team of 10 and providing critical platform services as part of the on-demand stack — right in the middle of one of the biggest trends in consumer behavior we’ve seen.

What Onfleet focuses on and where they’re going, you can read about that in all the news today as they launch into the public sphere. For me, what I’ll remember about this investment is that the frenetic pace of seed often doesn’t afford an investor the chance to get to know someone over a period of time. With Khaled, I had that luxury of time and no pressure other than our mutual respect for each other — and I had a second chance to learn that while he may be reserved in person, he’s relentless in his own quiet way. As I mature as an investor and begin to change my own style, I will look back on how I got to know Khaled over time as a potential model for how I operate as an investor in the future.

StrictlyVC Insider Series (May 13 in SF)

I’m excited for the StrictlyVC events that are rolling out this year. I’m proud to now be a member of StrictlyVC’s Advisory Board, and the next “Insider Series” event is just around the corner on May 13 in San Francisco. There are a few tickets left, so you can click here to register and get a ticket for the event: http://strictlyvcsinsiderseries.splashthat.com/

The agenda looks awesome for those of you who are venture-nerds like me. Connie Loizos (@cookie on Twitter) has done an incredible job to draw in great speakers who will be in conversation with the group, investors from Sequoia, Lightspeed, and Pantera — and Parker Conrad, the CEO of high-growth startup Zenefits. Specifically, Bryan Schreier from Sequoia will chat with Marco Zappocosta (co-founder of Thumbtack); Connie will have a chat with Lightspeed’s Jeremy Liew (who invested in Snapchat, Whisper, and a bunch of other cool companies; I will sit down with Dan Morehead from Pantera Capital to talk about the current state of Bitcoin, and Connie will end the content session with Parker from Zenefits.

All of that, plus some good beers and conversation before the show starts and after the show ends. I made great new friends at the previous event and ran into a bunch of old friends. For me, even though the content is great, that’s the best part — meeting other folks interested in investing. Get tickets while they’re still available.

A New Conference: The On-Demand Economy (May 19 in SF)

A year ago, I wasn’t sure if the “On-Demand Economy” (ODE) was the real thing or just a fad. I’d keep asking myself, “How can this persist?” and plenty of other people would ask me the same thing, given that out of 70 or so investments I’ve made, over 20 of them touch the on-demand stack in some way. Now as 2015 approaches the midway point, I have since gained more confidence this isn’t a fad, but the early stages of an on-demand world where we will summon goods and services via our watches, via single-purpose connected devices, and perhaps even without consciously thinking about it. Geographically, ODE services are tailor-made for the developing world and urban centers in Asia, especially as those consumers and labor suppliers go straight to mobile devices and skip the laptop and web generations entirely.

So, it was even more good fortune when one of my most frequent seed-stage coinvestors in ODE, Pascal, pinged me on IM to say he’s putting together a conference with my friend Misha @ Tradecraft. I jumped in and we are going to co-host this event on May 19 in San Francisco. Pascal had a good base committed, and so I called up Bastian, Max and Apoorva, Tony, Tri, Dan, Nick to participate — they all loved the idea, as did all the great tech writers who have cover the trend, like Ryan, Eric, Katie, Leena, and even Liz after her breakout series on the topic from 2014. I called up other friends who have also made core investments in ODE, and we are happy to have Satya, Steve, and Simon round out the event. As a bonus, I called up Shervin and convinced him to do a 1:1 Fireside Chat with me earlier in the day.

If you are a potential founder in ODE, work in the sector, want to learn more, cover the sector as a journalist, or invest in it, this is a can’t-miss conference. Here are more details:

Date: May 19, 2015 (all day)
Location: Broadway Studios, North Beach, SF (map)
Website: (link)
Tickets: (register)

Existential Risk In The Seed Stage

I just sent this out to Haystack companies which are at the seed stage. I tend to look at things through the lens of existential risk at this stage, which then inform the milestones (not all metrics-based) to reach as a guidepost. I wanted to share it with you all as its generic, but shows how I’m thinking about things today in mid-2015.

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My Job
I view my job as a small investor with a small fund is to identify and help great founders & companies. If I had to boil down where I help most, it’s around getting ready for a proper seed or Series A round, depending on stage. I am here to help and plan out these things with you way ahead of time, so please consider me as a resource.

(For those of you who’ve already raised rounds with lead investors, please disregard — they will now focus on this for you, hopefully.)

However…I have noticed I’ve fallen out of communication with many of you at the seed stage, email is hard, folks are heads down building, etc. To me, one of the Top 3 functions as CEO is to make sure there’s enough money in the bank. In this scenario, it means the next round, and investment rounds usually come together because of (a) breakout growth or more likely (b) reaching fundamental PM fit, key metrics, and other foundational milestones. In my experience, this stuff takes many months to set up and get right, and it takes many months to develop a relationship with the next lead investor.

These are all places where I can help, and I’m writing to offer this to you all again. Ultimately, it won’t work for everyone, and that is OK, but please do keep in mind that if you’re in a position where your cash balance is going down and things need to happen faster, it’s usually hard for me to come up with a palatable solution in a short period of time.

Other Notes
We are in a frothy seed market. It is good to be a founder during a seed round, but the number of institutional Series A deals are about the same. That means, the bar is higher for everyone, and everyone (you and me) should be constantly concerned about future financing risk — even moreso given how easy it is to raise seed. The drop off is severe.

The Month Of May
I will be gone for a lot of May. I have two work trips and taking a family trip. I will be on email, but slow to respond around Memorial Day. Text/FB message me for emergencies during the month, please. I’ll do my best to get back to you quickly.

Talking VC With Kate Kendall And CloudPeeps At Women 2.0

Last week, Kate Kendall of CloudPeeps invited me to speak with her at Galvanize in SF for a Women 2.0 event. I met Kate about a year ago and was happy to become a small investor in CloudPeeps about six months ago. She wanted to have a discussion with the Women 2.0 crowd about her experience as a female founder and CEO, about how she met and interacted with me, and to field questions from the crowd — which looked to be about 100+ people.

The talk went by really fast. Kate talked about how she raised her seed round (just under $1m) and all the tactics she used. It was fun for me because I didn’t see those, but she is a crafty one! We also broke down how I was intro’d to her, how we communicated while she was in NYC (heavy email). and how she finagled an invite to an event I was speaking at, engaged me in conversation, and a few weeks later — I became an investor in CloudPeeps. (The rest of the Women 2.0 talk was very fast, and most of the questions and answers were pretty generic, so I’ll keep this post brief.)

What occurred to me only in retrospect is that after two years of investing at the angel/seed level, Kate was the 1st female founder I’ve invested in via Haystack. Since then there are two more companies with females on the founding team. In my chat with Kate last week, the topic of “how was it different with Kate being a woman?” never came up in discussion. Reflecting back, it never really did come up in my chats, phone calls, and emails with her. In fact, I never thought about it. And, that’s the hard part to convey — the overwhelming majority of investors I know, even those who invest very, very early, wouldn’t discriminate against a woman as founder or CEO. In fact, I have seen many female startup CEOs be at the center of very competitive financing rounds, fielding multiple offers, and in total control of the situation. One company I’ve been dying to invest in for over eight months has a female CEO, and she has told me “no” at least 10 times.

In my chat with Kate, I did mention to the crowd that the life of an investor comes with saying “no” all the time, all day long. I think about my time and attention so much, I often say “no” to social events or running errands during the holidays with family. So, ultimately, investors are going to say “no” to all sorts of people, regardless of color or race or gender. The position calls for discrimination in the sense that most opportunities are passed on, even if they’re qualified or even exemplary as companies and teams. I myself have made a big $100M-run rate mistake as an investment I passed on for a silly reason. This isn’t to say that things couldn’t be improved or that there are unsavory stories and experiences people experience in the game to get investment, but two years in, for at least what I’ve observed, both first- and second-hand, the overwhelming majority of investors I see are busy chasing anything that’s growing or has evidence of promise and with disregard to “who” is helping make that growth or promise happen.

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.

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