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I recently had the opportunity to attend a technology startup job fair in NYC Uncubed at the Metropolitan Pavillion in Manhattan. This event, however, was not your typical job fair. It started at 9:00AM with an educational component called the skills track. This included talks with titans of industry (founders, CEOs, thought leaders), and some basic classes on web development, customer acquisition, product design, etc. I had the opportunity to hear Ash Ternes speak about his ad-tech company, Intent Media. Intent utilizes predictive analytics to recognize when a site visitor is low quality and not very likely to convert on the e-commerce site they are visiting. Once that recognition is made, ads from relevant competitors are served. It is a fascinating business and potentially scary proposition for marketers to allow their competitors into their store, but they have proven it to be a valuable way to monetize non-converting site visitors and with the strength of their predictive algorithms, one can feel comfortable knowing that in more cases than not, the value generated from the advertising exceeds that of the likelihood of a possible transaction.
After checking out this talk, I had the opportunity to attend the fair and meet a number of companies. There was a truly amazing group of NYC tech companies assembled at the event, including Uber, AppNexus, Thrillist, BarkBox, GrubHub Seamless, OnDeck Capital, Percolate, Gilt Groupe, Venmo, Buzzfeed, Intent Media, etc. The attendance was great and their were plenty of friendly representatives from all companies there providing the opportunity to learn more about their business as well as identify any potential openings that might be a good fit for my background. In addition to this great career networking opportunity, the event was a lot of fun. It was open bar, had lots of great food, and plenty of fun games at many of the company stands, including a dunk tank at OnDeck Capital and a skateboarding halfpipe in the middle where professional skaters were constantly doing electrifying tricks. All in all, NYC Uncubed is a must attend event for anybody interested in becoming a part of the NYC tech community.
This post was written by Shehzad Khan, Columbia MBA 2014
This past week on May 7th, we were fortunate enough to have Jeff Jordan come in as a guest speaker for the Stanford InSITE fellows. Jeff has been a partner at Andreessen Horowitz since 2011 and serves on the boards of AirBnB, Belly, Circle, Crowdtilt, Fab.com, and Pinterest among others. He was the former President and CEO of OpenTable and joined the company in 2007 where he helped take the company public in 2009. Prior to that Jeff was also the President of PayPal and SVP at eBay and he received his MBA from the Stanford GSB.
The meeting was an opportunity for the Stanford fellows to ask Jeff questions about startups and VC in a casual setting. He talked about how the greatest lesson he learned on how to manage others was how necessary it is to know yourself well in order to understand how others perceive you. He mentioned that the reason he transitioned from the operating roles at OpenTable, PayPal and eBay to being a VC at a16z was because he found the operating experience to be all consuming and enjoyed working hard but found it to be very stressful. He also found, after a while, that he was repeating a lot of what he had done previously and finding it less challenging. On the side, he would often meet with entrepreneurs to provide them advice and hear about their new ideas and he discovered that he would really look forward to those meetings, so he figured he would look into doing it full time as a VC.
Jeff also discussed how the a16z model is very disruptive to the VC industry because the firm employees over 100 employees, the majority of which are focused on helping the companies in the portfolio with everything from marketing, recruiting, corporate strategy to operations. All the partners at a16z have experience either operating companies at a senior level or founding their own companies and he finds it more helpful to the entrepreneur when the VC has gone through the same experience before in terms of providing advice and guiding them on the Board.
Since joining a16z, Jeff has found that the hardest aspect of being a VC is time allocation. He is actually working 2 to 3 hours longer each day than he typically worked at OpenTable since he is covering 12 investments focused on the consumer space. Most VCs typically only have capacity to sit on the boards of 10-14 companies, which is why they typically ask for 15-25% ownership in term sheets. He has also found that a good chunk of his time is spent on writing blog posts, which a16z requires all partners to do. He has found that the blog is a great way for the partners to get their thoughts out there and provide additional guidance to entrepreneurs.
We ended the meeting talking about what Jeff finds to be the most difficult part of the diligence process for investments. He mentioned that one of the most important factors is to get a good grasp of the team and people. He often does this by focusing on learning about their story and how they came up with the idea. However this is becoming more coachable these days, since many startup accelerators like YC are training their entrepreneurs to get their story down early in the process. It can be really difficult to understand the intangibles of the team, but he often looks for conviction and courage in the founders and entrepreneurs who are passionate about the company because they are doing it for a greater purpose or mission instead of making a lot of money and selling to Facebook or Google.
Over the past few months, a small group of InSITE Fellows (past and present) has had the pleasure of working with David Aronoff at Flybridge Capital Partners to examine the health of the New York venture and startup ecosystem. It is no secret that New York’s startup scene has been on a tear in recent years. The press has been rife with New York tech funding stories, favorable and unfavorable comparisons to Silicon Valley, more than a little hometown boosterism, and occasional warnings of bubbles and crunches. We wanted to dive deeper and see what the data had to say about the health and sustainability of New York’s tech sector. Our team examined the trends in and current state of New York’s tech startup capital funnel—from seed-stage financing, to later-stage venture/growth funding, through M&A and IPO activity. The study went through several iterations of refinement and internal discussions. David then wrote an excellent piece summarizing our findings and what they mean for the current state and future of New York’s startup community. We would encourage you to follow the link and read it.
In brief, we found a startup ecosystem that is growing in remarkably healthy balance. Funding growth is well-distributed between early- and later/growth-stage financings and across sectors. M&A activity is keeping pace nicely (although naturally lagging slightly as companies incubate), and many of the City’s leading companies appear to be nearing major liquidity events. A few representative stats from David’s piece underscore these trends:
- $13.5B+ in venture financings across 2,700+ transactions (NY VC Almanac, p. 7).
- 800+ M&A transactions, including substantial exits between $50M and $1B in the past two years. Notable companies include Admeld, Buddy Media, indeed, MakerBot, tumblr, and many others (PWC / NVCA Moneytree Report Feb 2014; data from Thomson Reuters)
- Critically, we’re seeing a number of very strong companies (such as AppNexus, mongdoDB and ZocDoc) approaching “unicorn” status as they surge toward IPO candidacy in the $B+ range.
- NYC accounted for 7 (9.3%) of the US VC-backed IPOs in 2013 (Wilmer Hale Research, Feb 2014). Additionally, Shutterstock (the most the successful of 2013 NYC tech IPOs) was not VC-backed, and stands with a market cap of nearly $2.7B.
As David details in his piece, the health of New York’s startup ecosystem extends beyond fundraising and exit statistics. As the City’s company formation and capitalization activity has expanded, so too has its tech talent pool, its tech-oriented education infrastructure, the vibrancy of its tech event community, and the investment of global tech firms—including Facebook, Twitter, Google, Microsoft, and Yahoo!—in the City.Anyone who follows tech knows that it has been an exciting few years in New York. As with any bull run, it can be difficult during these heady time to gauge how healthy the market is underneath all the hype. That may be particularly true for those of us who were not yet of age during the first tech boom (and bust) of the early aughts, and for whom the status quo has been ever up and ever to the right. While there is doubtless some degree of of hype surrounding today’s New York tech scene, it is reassuring to see that the fundamentals of our growing sector nonetheless appear strong.
For the three of us on the InSITE team, this project has been an educational and rewarding experience that leaves us feeling even more optimistic about the ecosystem in which we have chosen to invest our careers. We’d like to thank David for leading this charge, and we encourage everyone to check out his piece for a more robust analysis on the state of New York’s venture and tech ecosystem.
The goal of InSITE projects is to help build promising young companies while giving our outstanding Fellows valuable startup experience. Each selected company is assigned a team of 3 to 5 Fellows at the top of their field from various disciplines. The team of Fellows will meet with the company for a minimum of five meetings as they work towards the agreed upon deliverable, which may range from a pitch deck to A/B testing new sales strategies. By closely working together, companies receive the help of great minds with fresh eyes to evaluate their business and strategies, [while] students get to work with promising start-ups and gain insight into the challenges that entrepreneurs face. With that in mind, here are the 6 key considerations we walk through to best approximate a company’s potential success and compatibility with InSITE.
Our foremost goal is to work on compelling projects. We are not afraid to fight uphill battles with our companies! Although we do exclusively work with technology companies, there is no market or sector that we explicitly shy away from. In fact, we actively pursue cleantech and biotech projects. Both markets are notoriously competitive and come with daunting pipelines and sales cycles.
While I have never asked to see a line of code or brought a hardware product home overnight, I like to conduct as lengthy a demo as reasonably possible.
For software and internet companies I look for the following:
• Clean interface
• Intuitive user experience
• Does it include everything that was promised? If not, why?
• Who are the users? How many are there? What do they say?
For hardware companies:
• Patent situation
• Durability and/or longevity?
• Who are the users? How many are there? What do they say?
When I took Lean Launchpad with Steve Blank this past January, I watched him endlessly barrage teams by asking, “which customer need or problem are you solving!?” While I am not a lean startup zealot (prefer the term “enthusiast”), I think Steve hit this point on the head. At InSITE, we like to see a well-thought-out business model that brings something new to the market landscape. The value proposition does not need to be written in stone, but we do look for a focused and differentiated strategy.
Almost every early-stage venture capitalist that I know has told me that the “team” is the most critical factor in their decision to invest. InSITE is a career-long community, therefore it is paramount that the team is comprised of individuals with whom we want to work, co-promote, and build. Some specific factors we look for in the founding team:
• Domain expertise
• Team dynamic
• Clear roles
• Company culture
• How the team will contribute to the InSITE community
While VCs require a strong team with a great product in a breachable market, at InSITE we have an additional requirement: an organized and attentive executive team that is able to put together a well-structured and worthwhile project for our Fellows. InSITE has become one of the most sought-after fellowships by giving graduate students the opportunity to work on cutting-edge projects for the most promising companies. We do not want to expend our manpower on iterative cold calls, even if it is for the most talent team. While some projects, such as market research, customer acquisition strategy, and capital raise support, fall more directly within our wheelhouse, we are a dynamic group of individuals unafraid of getting our hands dirty.
Stage of Development:
We do not explicitly look for teams at a certain development stage, but there is a general goldilocks equilibrium that is typically just right for us. It is important that the company is developed enough that it can structure a good project, but not too developed that our fellows are far removed from the organization’s leadership. The company may be too underdeveloped if the product is still in the conceptual stages, the team is not full-time, or if they are still unsure of their value proposition. Companies may be too developed if they have more than 20 employees, project implementation would take longer than 3 months, and company executives are not able to dedicate focused time to the InSITE project. Large companies can still qualify for InSITE Special Projects on a limited basis. Recent past special projects include Common Bond, Microsoft, and Sony.
Nolan Walsh is a first-year MBA student (2015) at Columbia Business School.
This was my first trip to both Austin and SXSW Interactive. For a first-time initiate, the scene on 6th Street is a real spectacle – like a weekend-long food festival where the primary offerings are Shiner, business cards and corporate schwag. As we bounced from one themed event to the next, I was equal parts inspired and entertained by the multitude of crazy, ambitious ideas and the people pursuing them. Torrential downpours cast an occasional shadow on the festivities, yet still felt like a major upgrade from winter in New York.
The highlight of my trip, however, was the InSITE Fellows base camp a few miles out of town. Stacked six people to a room and sleeping on whatever surfaces seemed softer than the floor, it felt like a weekend-long sleepover. Instead of staying up late telling ghost stories and watching movies, we stayed up late talking tech, entrepreneurship and anything else that we were passionate about (ok, there were YouTube videos playing in the background). The house was filled with a contagious energy that left my mind reeling all the way to the airport.
Instead of bringing one major epiphany, SXSW reinforced something for me that can be easy to forget – it’s amazing how much faster you can go when you surround yourself with hungry, talented people. This is exactly why I wanted to be part of InSITE. While we won’t know for some time if anything tangible will come from those early morning conversations, I wouldn’t be surprised to look back years from now and pinpoint this trip as a key moment. I’ll be returning next year. And not just for the brisket.
2015 MBA Candidate
Columbia Business School
Dave McClure, and the 500 Startups team, extended an invite to their conference focused on ecommerce at Microsoft in Mountain View in March. The line-up of speakers was impressive and included founders and VCs focused on the ecommerce and payments space. Some guests were Bonobos, ModCloth, Warby Parker, Braintree, Stripe, WePay, Andreessen Horowitz, Forerunner Ventures, Cowboy Ventures, and SoftTech VC (Stephanie Palmeri, an InSITE alum).
Last year, at a Business Insider conference in New York, the message for ecommerce success was to have exclusive items to compete with Amazon. This year, at the Commercism Conference, payment and ecommerce companies both shared the idea that a curated shopping experience was much more important. (Content is back to being King.) Harley Finkelstein, Chief Platform Officer at Shopify, said the “future of retail belongs to creators and curators”. People are going to demand choice in how, when, and where to shop. Unfortunately there is not one recipe for each brand because a ‘curated experience’ can vary as drastically like allowing consumers to mix-and-match outfits or uploading pictures to be screen printed on t-shirts. Bill Ready, CEO of Braintree, described a ‘curated experience,’ less as a demand from the customers, but more as a context-driven experience from customer data. This view uses historical customer behavior to enhance the current customer experience.
This overarching discussion leaves many things to be discussed, but is an interesting shift from the prior thoughts on competing against Amazon in ecommerce. Many e-retailers are trying to figure out just how they can succeed in this evolving world dominated by Amazon and new technology.
- Thilmin Gee, NYU Stern MBA (2014)
Fred Wilson of Union Square Ventures recently had a great talk with about 50 InSITE fellows. We had a video of a fireplace in the background to really set the “fireside chat” mood. Fred was an awesome guest. He was thoughtful with his comments, he touched on a wide range of topics (not just VC stuff) and he was genuinely interested in answering our questions.
He gave a very thorough background of his career and many of the ups and downs that he’s seen over the last nearly 30 years in venture. He gave some high level comments on the industry and some investment/macro themes, then opened up for questions. A few highlights:
He’s spoken/written a lot about investing in themes not industries. One of his recent popular themes is decentralization (e.g. twitter is a decentralized newspaper, fintech startups are decentralizing consumer bank functionality).
I asked if this is an evergreen theme that has always informed his lens as an investor or if it’s a cyclical theme that he’s looking at now specifically. Said differently, does he expect to see cycles of “decentralization -> consolidation -> decentralization -> consolidation, etc etc” or not? He said it’s a mixture of both. USV looks for new and emerging markets with chaos. No structure. These types of markets can emerge both cyclically or randomly. I assume that the underlying message is that if you’re investing in more mature markets, that means you’re investing in incremental changes.
Some of his other thoughts:
Data privacy: This is a tough balance because data makes many of the successes/conveniences in our lives possible (healthcare, google, twitter, etc) but data leakage has been in the news lately for good reason. He drew interesting parallels between today’s data leakage and the industrial revolution’s environmental pollution. He also identified data leakage management as “quite a fruitful” sector in the future.
Macro theme on mobile: Drew parallels between the proliferation of cars and the massive second- and third-degree impacts it had (suburbs, strip malls and fast food restaurants, for example). He asked the open-ended question about what the second-and third-degree impacts of mobile would be. E.g. (from me not Fred) mobile -> mobile money in Kenya -> lower-risk transfer of money to family members (i.e. you don’t have to give a bag of cash to bus driver and cross your fingers) -> encourages more migration to/from cities for work -> economic growth
Early stage vs. Late stage VC: In later stages, access is the most important differentiator. Later stage VCs need to show the ability to win deals vs. the competition. The deals that they fund are well-known and generally highly competitive. Price, brand and expertise are critical. However, for early stage VCs, commitment of support to portfolio companies and reputation among entrepreneurs is the most important differentiator.
JOBS Act: It’s been a disappointment thus far and what the SEC has done is somewhat inconsistent with the spirit/intention of the legislation.
NY venture and entrepreneurial ecosystem: Community building is important. Good VCs need to provide more than money and access, they also need to be cheerleaders for their entrepreneurs and their markets.
Are we in a bubble? He did not call this a bubble. However, he noted that he is not personally invested in public equities or fixed income.
Live demos: He said “its hard to evaluate an idea on a whiteboard, napkin or pitch deck”
How to be a good VC: Fred said it took him a decade to become a decent VC, and another decade to become a really good VC. He said venture is a tough business to be good at very quickly. His advice is to work at a startup then see if you end up in VC.
Fred Wilson has been a supporter of InSITE for years. On April 7, he will again be participating in our awesome Kingpins of Silicon Alley bowling event (more info here). He wrote about it recently here.
Washington, D.C. is a “cause”-oriented city. Nevertheless, these four quadrants are home to a vast, untapped potential for positive change. In particular, as the crossroads of policy, non-profit, and government, Washington, D.C. has the opportunity to be the “go-to” hub for social enterprises. With so many connections to philanthropic and policy organizations, social impact companies have the chance to connect with key players in every social issue imaginable. Moreover, for globally oriented social enterprises, D.C. boasts a diverse population of almost every nationality in the world and presents access to powerful government officials and diplomats. Given these unique attributes, D.C. is poised to become a social enterprise powerhouse.
While the startup culture of Silicon Valley or New York might be more pronounced and established, the D.C. entrepreneurship scene is undoubtedly blossoming. With the introduction of 1776, D.C. Entrepreneurship Week, and other initiatives, the city has begun to attract more entrepreneurs to its borders. Recognizing this shift, many organizations, such as D.C. Social Innovation Project, WeSparkt, and Impact Hub D.C., have sprouted up to provide resources for social enterprises. Additionally, established institutions such as Net Impact have opened chapters in D.C. to cater to the burgeoning social impact programs at local graduate schools. Even universities have begun to address the growing field of social enterprises through initiatives such as Georgetown’s Global Social Enterprise Initiative (GSEI) and American University’s Social Enterprise Association (SEA). These groups help support students interested in becoming involved in social enterprises in the United States and abroad.
Notably, the first ever “Lean In for Social Good Summit” presented by Lean Impact will take place in on March 26th in D.C. This conference and networking opportunity aims to educate social enterprises and non-profits how to apply “lean principles” to improve their operations. This event marks one of many budding opportunities for D.C. social entrepreneurs to engage with other entrepreneurs and non-profit leaders to grow their businesses. Looking ahead, these types of gatherings present a chance to develop a “SocEnt” culture in D.C. and create an environment where socially conscious entrepreneurs want to thrive.