This Week in VC – Scott Painter, CEO of Zag & TrueCar

Posted on Jul 1, 2010 | 7 comments


I think I’ve now mastered how to make images clickable so in the future you *should* always be able to click on the TWiVC image above and go directly to the video.  Just in case here’s the link to this week’s episode.

Our guest this week was Scott Painter.  Scott is the kind of guy you could just grab a drink with, sit back and listen to him tell stories for hours.  Actually, I’ve done this!  Especially fun when you get him telling stories about his pilot experiences.  But the most interesting is that all of his stories involved entrepreneurship.  In fact, he’s personally started 34 businesses and run 17 of them.  He’s personally led more than 50 financing rounds.  He’s very open in sharing what he learned – including the mistakes.  It’s part of what makes him so likable.

He didn’t tell it in the video but, ever the entrepreneur, Scott started a business to take couples up on a “mile high club” flight on airplanes as a way of getting all of his miles logged to get his next class of airplane license that required a certain number of hours logged.  But he did tell the story in our interview of the first business he ever founded – at 14.  He started a car washing business as a way to be able to drive other people’s fancy cars.  He got the kids in the neighborhood to chip in with the washing.  He calls it his “Tom Sawyer” company.

His first commercial enterprise came in college.  He was initially at West Point and then Berkeley but dropped out to focus on his business.  He sold it for a few million dollars and had a pot of money before he was even 25.

They say that the best entrepreneurs are those who fundamentally want to solve problems or change industries.  Scott has this obsession.  So while it started more about finding solutions to get him driving cars more or logging airline miles he also focuses on big, industry-changing ideas.

Scott’s first big foray into industry-changing companies came with CarsDirect, an IdeaLab company where he was the initial founder & CEO.  They raised around $350 million to try and sell cars direct over the Internet.  They realized through the process that regulations would make this a very costly business and one that they couldn’t build as he had envisioned.  Scott left the company, which eventually IPO’d and became Internet Brands.

He eventually applied his lessons learned in these experiences when he founded Zag, a company that helps consumers buy cars over the Internet at pre-negotiated prices with nearly 4,000 dealers across the country [disclosure: my firm GRP Partners is an investor in Zag].  While Zag is not a dealer if you measured it in terms of cars sold it would be in the top 5 auto dealers in the country.  And it carries no inventory.

The consumer product they’ve created is called TrueCar.  This website will tell you exactly how much people have paid for the car (make, model, trim, year) in your area and nationally.  It is the most accurate data out there that you can use to carry into a dealership and negotiate on price.

But more importantly we talked in the video about fund raising and how Scott has become so efficient at it.  We talked about the need to know “investor speak,” to target investors likely to be interested in your company type and the importance of going direct (versus using an agency to help you raise money).

And finally, Scott demonstrated his internal management tool for managing the metrics of his business.  If you’re an entrepreneur make sure you watch the video for that segment alone.  It’s awesome.

The deals we quickly went through are:

1. Foursquare

-A location based service which incorporates social and gaming elements

-Currently has 1.8mm users and adding about 15,000 users/day

-Rumored to have turned down acquisition offers from Yahoo and Facebook

-Money to be used for hiring and additional product development

-Competitors: Gowalla

Current round: $20.0mm Series-B led by Andreesen Horowitz, with USV and O’Reilly AlphaTech Ventures.  Total Raised: $21.4mm.  See: TechCrunch

2. Kontagent

-A social analytics platform for Facebook app developers and publishers that provides detailed demographic and engagement data

-Offers virality optimization tools and A/B testing inside Facebook

-Analytics also extend to iPhone and web apps using Facebook Connect

-Company plans to use the capital to build out sales and marketing and r&d

-a fbFund winner

-Competitors: OmnitureWebtrends

Current round: $4. led by Altos Ventures and Maverick Capital, with Larry Braitman.  Total raised: $6.0mm.  See: TechCrunch

3. Geodelic

-Founded in 2008 in Santa Monica by Ron Goldman (former CRO of shopping.com) and Rahul Sonnad

-Incubated by Clearstone Ventures in 2008

-Geodelic develops free mobile applications to easily browse your surroundings (restaurants, banks, businesses, etc)

-Users easily swipe through locations to find what they are looking for and the app presents tailored results based on learning what you like

-Includes content mobile guides, ie. Hollywood Walk of Fame

-Makes money by partnering with brands and marketers to publish location-triggered content

Current round: $7.0mm Series-B led by MK Capital, withClearstone Venture Partners and Shasta Ventures.  Total raised: $10.5mm.  See: TechCrunch

4. Vopium

-Danish VOIP technology company founded in 2006 by entrepreneur Tanveer Sharif

-New capital to be used for international expansion and to challenge Skype

-One of the new investors Raghuvinder Kataria is an early backer of Bharti Airtel and now the majority owner of Vopium

-Company reports 250,000 users in 49 countries with 1mm+ application downloads

-Competitors: Skype

Current round: $16.5mm in Series-B.  Total raised: $22mm.  See: TechCrunch


5. Palantir

-Based in Palo Alto and founded in 2004 by PayPal alumni

-Offers two products: Palantir Government and Palantir Finance

-Palantir’s products are used for integrating, visualizing, and analyzing multiple large datasets

-Used by hedge funds, the intelligence community and multiple government agencies.

-Spread through word-of-mouth as the company has no sales team, all engineers

Current round: $90mm led by The Founders Fund, including Youniversity Ventures, Glynn Capital, Ulu Ventures, Jeremy Stoppleman, Ben Ling, +.  Total raised: $125mm See: TechCrunch


6. Triggit

-Based in San Francisco with 13 employees, CEO Zach Coelius

-A demand side advertising platform which allows advertisers to bid on individual ad impressions in real time, based on the site and who would see it

-Site launched in October and CEO stated ad impressions are increasing ~200% month; now at 15 billion impressions/day

Competitors: Google (Invite Media), MediaMath, X+1

Current round: $4.2mm led by Spark Capital and Foundry Group.  Total raised: $6.0mm.  See: TechCrunch

7. GetJar

-Fast-growing application store with more than 1billion apps downloaded (second in size only to Apple)

-Includes 70,000 apps for all major mobile OS platforms, including Apple’s

-Investing much of new cash to build presence in Android platform

Current round: $11mm Series-B led by Accel.  Total raised: $17mm.  See: paidContent

  • http://twitter.com/trefn Tim Trefren

    The metrics dashboard is displayed at 43:30

  • Sussana

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  • http://bothsidesofthetable.com msuster

    thank you! perfect.

  • kris

    Good interview. I always learn something new.
    I do disagree with the prediction that cars are becoming commodity products.

  • Roko

    The car business is a real cash cow (I mean for used cars). I would like to see some innovation on that level as well.

    Marc, when will we have the privilege to have Fred Wilson on the show? I think that is going to be one of the best pieces of content ever.

    As a matter of fact, I would take it further and say you two need to come up with a co-blog post twice a month. You could just email each other back and forth about a subject and post the thread.

  • Liam

    Great video and conversation Mark. His dashboard is a thing of beauty but I think the fact that they have 10K transactions a month helps rationalize building it. Do you agree with Scott on the point about giving up 1/3 of the company in every deal? Not buying it.

  • Jason Webb

    thanks for posting this… the video was utterly fascinating. Really great info.
    Thanks and Regards/-
    Jason Webb