My Interview on This Week in Startups with Jason Calacanis

Great program there, Mark! My first time watching Jason's show.

I thought I might get lost with you two chatting about your perspectives on the VC industry and startups, but I actually found myself nodding in agreement quite a bit...about scalability issues with the callers, etc.

Looking forward to more in-depth programs like these.

Thanks for the feedback, Todd.

Hi Mark,

Very inspiring interview indeed, i liked very much the point you raised regarding the case where you had to cope with 8 other competitors where they were offering their service for free where you had to charge users. So in a nutshell, how do you deal with such a situation?
My experiece on my first project says
'' Forget what they are doing, keep charging cause simply you do not have the option of not doing it, offer a competitive package and keep working on it. As a matter of fact, what they offer for free is a fraction of their entire service , on top of that it all depends on the scale level you are looking forward growing, they may need 100,000 paid users to break even but you may need just 100 "

what do u think? any advice greatly appreciated
Elias

If you have competitors giving stuff away free then you need to create a differentiated product and prove to customers there is value in paying.

re: 8 funded competitors - I doubt we'll be back to that mode any time soon. It's why I'm glad the VC industry is shrinking.

thanks for the tip Mark, greatly appreciated

" re: 8 funded competitors - I doubt we'll be back to that mode any time soon. It's why I'm glad the VC industry is shrinking "

are u refering to the freemium business model?

No, I'm referring to VC's funding 1 innovator and 7 "me, too" companies.

Nice interview Mark! You pack a lot of very useful information into this session with Jason. I found your discussion towards the end about how to treat first time entrepreneurs, specifically "feed the family" concept very enlightening! Great to see such honest battle-tested advice. The So Cal tech. scene is alive and well and thanks to VCs like yourself growing!

Thanks, David. I appreciate your feedback.

Nice interview Mark.

At some point you mention not being in favor of distributed teams, especially if the members are across continents. However, you have also pointed several times that your second startup chose to have part of its engineering team in Pune.

How come you are skeptical of such an environment while it worked for you in the past ?

It worked but it wasn't optimal. I think it worked because we had all worked together in the past.

If you need to split the team my rule is that management has to be in one location. That includes: CEO, Head of Product Management and Chief Engineer. You can have a distributed team in tech, sales or customer support. But my preference is still one location. As a company you pivot much more quickly in this environment and pivoting quickly is the difference between success and failure.

great interview mark

makes me want to do a deal with you

maybe we can back jason's next company :)

;-) re: first point - for sure. Maybe that Korean company we discussed? Hope you had a chance to speak with them.

No. I didn't realize they were waiting on me

Great show Mark. As an entrepreneur (according to all the criteria you listed at least ;) , I often wonder how much your entrepreneurial experience weighs on your investment outlook? Some make it seem like the VC model is pretty much a rigid formula, with little wiggle room. Others like you bring a little more (what an entrepreneur would see it as) "down to earth"-ness, which I had to comment here that it's refreshing and appreciated to hear.

thank you. appreciate the feedback. there are some VCs that have more wiggle room than you think, you just need the "inside baseball" playbook ;-) Others are more rigid.

I do have a brief question regarding your comments on mobile apps:

I appreciate that the current apps market froth is going to settle down and change in many ways. I also recognize that there will be many categories of apps where a move to a browser interface is going to be a natural drift. However, did I hear you say that you think Native Apps go away on mobile and everything goes to webapps and browsers? Isn't this the promise that's been around since the network computing hype of more than a decade ago - just on mobile?

Do you believe there will be no place for native apps?

Not trying to ask a stupid question - or prod needlessly - just genuinely wondering what your thoughts are on that.

Well, I just remember when the Web was first popularized there were many apps. Apps are a function of 2 things: 1) insufficient bandwidth and/or 2) things that are natively better done on your OS vs. a browers.

So, my assertion is:
- over time your bandwidth issue on mobile goes away
- over time your browser capabilities on a mobile browser encompass more functionality.

Note how Meebo has been able to chew away at the IM native app market. Do we really need all Twitter apps to be in Adobe Air? They are merely a function of slower bandwidth or lack of browser capabilities.

Same will happen, IMO, on mobile devices. There is already too much complexity to build for all the platforms out there. Browsers can begin to normalize this over time.

I'm not saying over night. But, REALLY, do I need apps for Gap, LandsEnd, Banana Republic, The Weather Channel, Philadelphia Phillies, etc. etc. ?

So, are you perhaps not talking about two separate things there? The first is whether native will die and webapps will replace it, the second is app clutter. I don't think they're all that related, but instead two distinct problems. This is your blog, and as a start-up entrepreneur I am very appreciative of it - it's one of the best out there - so I'll try not to clutter it with my opinions, but briefly my thought would be:

- this idea that all apps become browser based has been around for a long time and the truth is there will always be some sort of performance delta to be gained by accessing the device's horsepower and hardware features over and above webapps, and I think that's why we don't see installed apps disappear
- webapps will increasingly become the default mode for many types of app, and where information services can be accessed just as well through an interface that fits in a browser that's going to win
- more and more of these apps will look like feeds of data interpreted in different ways and displayed for interaction in a whole bunch of ways, some of which may be best served by a native app (i don't think the end user cares)

That may sound like I am having it both ways and agreeing with you as well as disagreeing, I guess I am just saying it's not going to ever approach the asymptote or the limit case if you like.

But I think that's unrelated as to whether you need a Gap app or a Phillies app. That's about screen real estate. That's about staking a claim. You see, I think the insight most people are missing is about what apps really are to the mass market audience. Apps are becoming the new form of self expression - both in terms of having your own apps out, and in terms of the apps you choose to have on your mobile desktop. (Everyone wants their own app - that's why we let them do just that!)

If you're opening up a new channel of communication with an audience - whether it's a massive audience or a micro-audience, claiming that screen real estate on the device that they carry with them at all times and which is becoming their default mode for accessing information and media, becomes huge. You think app clutter is bad with 100,000 apps in the app store and predictions of twice that this time next year - I think those figures are the tip of the ice-berg. I think there'll be a million apps this time next year and what we think of as an app is going to change substantially.

Whether this claim on your screen real-estate is a native app or a glorified bookmark is immaterial.

Again - thanks for your blog and thanks for updating so often. I have a whole google reader section for VC blogs and so many are rarely updated, and few contain such a rich mix of advice, anecdote and insight. It's much appreciated.

Thanks for your input and feedback.

I think we're in the same place on this argument. I would just point out that there is a huge overhead for developers to build for all platform so normalizing things is good for everybody.

Where apps need the additional functionality of being native then so be it. But most don't.

Thanks, again.

hi mark

i'd be interesting in seeing your thoughts on the "small ownership" question. can you point me to the part of the video where you and Jason talk about that?

Sure. The dialog on the topic really begins around 8.40 in the video and I mention your post at 10.15. The discussion is completed by 12.00.

The gist of the discussion for anyone who doesn't watch is as follows:
- A VC (or group of VCs) should never take more than 40% in a single round
- My preference is to see it capped around 33% and I call 25-33% "the fairway of VC
- It's true the owning a small stake is not a problem if you become a smashing success (e.g. Twitter)
- What I worry about is when a VC takes 8% of your company and like most startups you hit the rough patches. When a VC has a big portfolio and owns 8% of a company with issues you may not get all the attention you want.
- I saw this personally as a CEO. My advice to entrepreneurs is take less investors and make sure they have enough "skin in the game" to care

(but people should still watch the video - lots of great topics ;-) )

i'll check it out mark

we have started with as little as 6% and grown our position to close to 20%
over four rounds

that's possible if you are the only VC or if you partner with a like minded
VC and fund the company together without adding additional investors

so i agree that sub 10% is not enough for a VC firm if they don't have the
opportunity to buy more over time

but if that opportunity is there for them, then the 20% or bust thing is
just a desire to get it all at once and that's not neccessary

Fred,

Just want you to know that I have had the good fortune to spend some time with Mark and he definitely is a Jamie approved VC:)

Hope you guys do something in LA that will bring down here.

Jamie

Thanks, Jamie. The check is in the mail ;-) LMK when you're up for b'fast again.

I want to move to LA for the winter months to be honest. Not gonna happen as long as my kids are in high school. But one can wish as the days get short and cold here in NYC