It all started in 2010 with Klout. I wasn’t a believer. I had always liked and respected CEO Joe Fernandez but could never get my head around the fact that the Klout was putting up charts showing who influenced me and it didn’t map to the reality I knew in my head.
I had been trading emails & Tweets with venture capitalist John Frankel and we were to meet in person in March 2011 at SxSW to talk about Klout and other investments he had made. We met at a private party hosted by his venture partner Mike Yavonditte and I outlined my concerns for the lack of precision of the algorithm.
I was used to this debate. I had been hanging around Klout for a year and many of my friends had angel funded the company and were champions. Nobody had any sound logic on why Klout would be successful.
John laid into a well-honed thesis on why the social web needed a “Page Rank” equivalent for people. He was an early investor in Klout and was the most compelling voice I had heard on why the company would become hugely relevant.
Other people were convinced including Kleiner Perkins who lead their $30 million fund raising in 2012 (they had previously also invested in 2011).
Most notably Michael Arrington – who was originally as skeptical as I was – also became convinced about Klout and voted with his checkbook.
From this debate about Klout John and I have had a series of in person meetings and debates about our industry (both VC & tech) and what is changing. His views are expansive and his approach non-traditional. But I never leave an encounter with John without a few nuggets of views that I didn’t hold when I arrived.
So I was delighted that he was recently in Los Angeles and I had a chance to have one of our typical private meetings but this time we did it with a camera on. You can watch the conversation on YouTube and as you’ll see – even though the camera is on we had no problem sparring on topics and coming to a common view (or not). Or you can read the quick show notes at the end of this post and click on any link to jump directly to that short topic.
If you’re still not convinced about Klout – you can see John’s views here. But note that he was equally early and passionate about Cornerstone OnDemand and it’s now trading at a $1.6 billion market cap so he has a history of weighing in early and being right.
And oddly it took an investor in New York to highlight to me Cornerstone OnDemand – one of the most successful software company in my home town of Los Angeles! – and why it would become a powerhouse. Count that two lessons from John.
His latest passion? I almost don’t want to tell you because I love the product and would love for them to stay under the radar screen from investors ;-). But since he talks about it in the video I’ll spill the beans. It is company 500px who has a beautiful product and a burgeoning community on the iPad and web. He’s been bending my ear about the company for a while and each time I see him the product looks better and better. 500px is in Toronto.
And now one of his newest passions is Nova Spievak’s Bottlenose, another Los Angeles company.
We discussed all of this and more in the video. Including ff Venture Capital’s unique approach to finding deals and the services they provide to their startups. The most interesting to me – and this got me thinking – is accounting services provided at cost. Every startup needs accounting and it’s often a huge distraction and non core. And every investor wants better records and transparency. So why not offer this service to startups at cost? Smart.
I know one friend who ran QuickBooks for 3 years and is now in the process of having to restate his financials for the past 3 years culling through millions of records to normalize his revenues. Put offer proper accounting at your peril.
And ff Venture Capital cleverly has created a blog where their portofolio companies contribute. It seems obvious enough – have a centralized place for ideas which can drive more viewership than only blogging on each startups own website. Don’t be surprised if you see me bagsie that idea for GRP Partners.
The funnest theme we discussed was John’s belief that the technology changes that are sweeping through society today are as important, dramatic and pervasive as those that swept across the world in the 1800’s during the industrial revolution.
I hope you’ll enjoy our discussion as much as I enjoyed participating in it.
2:00 Why don’t you like the term VC?
5:30 John: Brands with a proven track record are attracting capital.
7:00 80% of the VC funds last year went to a small handful of funds. What’s your take on that?
10:30 Question from the chat: How do you define the difference between traditional VC and private equity?
12:45 Describe the structural, cyclical trends you’re seeing in technology.
16:00 What should government be doing?
21:00 We’re unquestionably moving towards more democratization, which is a good thing, yes?
23:00 Discussion of California’s social media privacy laws.
25:15 Did you follow the Quora scandal?
27:00 John: Trust and reputation are hard to earn and easily lost.
30:00 What makes ff Venture Capital unique?
37:30 I think there’s an opportunity to train people in several month to be entrepreneurial leaders.
39:15 Why did you invest in Klout? What did you see in them?
43:15 John demonstrates how users can curate their own Klout feed.
46:45 Comment from the chat: Are you familiar with Upstart.com?
47:00 John breaks down the Bing/Klout deal.
50:30 Let’s talk about the biggest company in LA that no one has ever heard of: Cornerstone OnDemand.
52:00 Do you really think LA tech is lacking a sense of identity?
55:00 How much was SuccessFactors bought for?
56:45 Looking at the stock price of Cornerstone.
58:30 Tell me about your investment in 500px.
1:05:15 Tell me about Bottlenose run by Nova Spivack.
1:08:00 Doing a sample search on Bottlenose.
1:11:15 Thank you to Scott Walker Corporate Law for supporting the show. Everyone check it out at walkercorporatelaw.com. Thank you also to Detroit Venture Partners. You can thank them for their support @DVPtweets.
1:15:45 Who are all of the members of your team?
1:19:15 Thank you to Walker Corporate Law and Detroit Venture Partners. And John, thank you so much for joining us today.