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:
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.
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.
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 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)
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.
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.
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.
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.
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.
In the middle of 2014, one of my friends on Twitter (@Stammy) kept retweeting an account into my feed, usually with a screenshot. Turns out, it was his friend and roommate, and that friend and roommate had created software which just looked different than other products.
I conducted a bit of Internet sleuthing and discovered my friend’s roommate used to work for a company I was dying to invest in earlier but couldn’t convince them. That company creates great web and mobile products, too, so my interest piqued. I asked my friend for an intro, and after a few months, it came through. I rushed to meet the entrepreneur a few days later.
Turns out, my timing was good.
Anand had built the v1 of Gyroscope, currently web-based software which served as a hub for all of a person’s connected device and monitoring/tracking data. By connecting various accounts to your Gyroscope, the products gives you a kaleidoscopic view of where you’ve been, the pictures from those places, how many steps or calories you’ve collected and more. But more than just aggregating data, there’s something about the product, the design and animation, which makes it compelling.
I wasn’t sure where Anand was in his thinking. I wasn’t sure if he wanted to join a company, or still travel. We talked broadly about his options and I didn’t share any of my own views on what he should do, except that if he thought about it and wanted to start a company, I would be his first check and help him close the round.
A few days passed and he got back in touch. He was ready to start. I didn’t expect that, but was psyched about it, no doubt. We put our minds together, came up with a plan, started engaging lawyers, and all those details — we priced the round, I wired my funds, and started making introductions for Anand. We also opened up a small AngelList Syndicate, which has been closed for a while. At the end of it all, a larger fund also came in to give Anand and Eric a good solid cushion to build out v2 of the product.
As 2015 unfolds, the landscape has changed. Apple has committed some of its attention with Apple Watch to digital tracking, fitness, and health sensors. We are accumulating more connected devices which collect more and more data about us or our surroundings. What will do with all of it? Who owns that data? These are big questions, and while I don’t know the answers, I have a good feeling Gyroscope will be in that conversation.
Back in 2014, Pascal, another early-stage SF investor who invests in companies at the intersection of local and mobile, introduced me to a kid from Mississippi who is now in the Bay Area starting his company. I searched my email and it turned out Jacob from Exitround (a portfolio company) also tried to make this connection a long time ago, but for whatever reason, we never synched up. The kid’s name: Keith. His company: podcasting.
I get so many pitches around podcasting. It’s hard because it’s just not an area I want to invest in, so I figured some polite way to not engage further. But, then, something interesting happened — I asked Keith about how he started on this, and his answer begin with something to the effect of: “I’ve been doing this since I was 12 years old…”
Oh, really? I rarely hear that, so I listened more (see the pic here, from 1999). Turns out Keith is a huge, huge mega-fan of the Buffalo Bills, so huge that he started building and managing fan sites for the team back when he was 12, living in Mississippi. Since then, Keith went to school, was a producer with Sirius Radio, and during that time, had a novel idea for a product: An app which played fan-oriented podcasts for college sports teams.
To get his idea going, Keith and his team figured out something clever: In many cities where college football was big, VSporto discovered, vetted, and created a monetary incentive for superfans of the local college teams to create a podcast around the team. VSporto aggregates these, pays out CPMs, and builds micro-apps for mobile devices that just focus on a particular school. In this on-demand economy, people are changing jobs and careers quickly. For VSporto, they’ve noticed that people quit their basic day jobs to pursue their interests and talents for podcasting and creating media around the subject they love.
Say you went to Florida State University — VSporto would have ~15 podcasters (or more) who create content, and the app broadcasts those streams through the week leading up to the game. Additionally, one might think the football season lasts a few weeks, but in many of these towns, it’s a full-time job just being a fan.
Check out Vsporto here. To date, they have ten (10) team apps and engagement time for MAUs could be from 47-93 minutes. The average listener goes through two podcasts per day, and nearly 1 out of 5 users will also download the app of the opponent their team is playing; many of their apps have been ranked quite high in the Sports category, which is notable for such a seemingly niche app. The engagement is so deep that the team visited a specific college campus for a football game and hosted a viewing party: Over 200 people showed up. As VSporto commissions content, the company also holds the licensing rights to the media, such as being able to license the content out to various radio stations.
This startup broke a lot of rules for me. I don’t want to invest in podcasting, but they figured out a medium not many others would stick with; and I don’t like to invest often in pure mobile apps because the distribution is choked. When I heard this, I sort of took the meeting as a courtesy, but a few minutes, that’s when it hit me that this is exactly why I don’t like to answer those “What are you looking for?” questions often posed to investors. If I knew what to expect, I would go and try to build it. In this case, I had to have enough patterns around podcasting and Apple’s iOS to make a decision about whether to get involved. I would have never thought of combining commissioned content with an array of scattered apps that all meet on the backend.
It’s early days for VSporto, but I never worry about Keith and the team. They are the only team I know who would have the passion to pursue this idea of building and stitching together niche markets. It is my privilege to support them, to have introduced them to other investors, and to have opened their round on AngelList. In terms of relaying a story about a founder and an a unique approach, it’s probably one of my favorite stories to show and tell.
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?
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.