Posts by Mark Suster


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Unicorns.

The most overused word in the technology industry today. And they aren’t even fucking real. That is how absurd things have gotten. No, I take that back. THIS is how absurd things have gotten:

“I have to raise at a billion-dollar valuation”

“Why? You don’t have the revenue or profit to support that valuation.”

“But if I don’t I won’t be able to recruit the best people in the market. And every great company is raising at north of a billion dollars now so I need to in order to compete.”

“Ok. Well, if you choose the price, I choose the terms.”

“Deal.”

I can’t make this shit up. Can it be that Silicon Valley (the HBO show) isn’t farcical enough?

Yet in every great farce there is a lesson to be learned. And here is one take away from this current behavior that you take to the bank … The Power of the Narrative.

In November of 2013 Aileen Lee of Cowboy Ventures coined the term “Unicorn Club” as it relates to billion-dollar startup companies. I’m sure she had no idea just how powerful that word and that concept would become. Fred Wilson immediately weighed in on her analysis, a meme was born and we were off to the races talking about “Unicorns.”

Are there enough unicorns? Are there too many unicorns? Is being a unicorn ambitious enough? Should there be decacorns? How many unicorns were created in the last year? Show me your unicorn. Honestly,

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Lawsuits. I’m so tired of the nature of the legal system in the United States where bullying, intimidation and mobster-like shake-downs are becoming prevalent. As I write these words I already imagine my next deposition in which I’m asked to read this out loud.

Lawsuits are becoming so prevalent these days. Even when I’m not the one being sued I find myself being dragged into deposition after deposition and my blog (along with all my emails) are being served as evidence. So I look forward to reading this to opposing counsel at the next deposition where I can tell them that I’m not afraid of appearing in court and I’m not intimidated into frivolous claims in search of shake-down money.

I often speak about co-founder fighting and how this ends in lawsuits but this has become much more prevalent. I’d encourage you to watch this quick 3-minute video with some views on what I call “The Co-Founder Mythology” that is perpetuated in Silicon Valley. The simple point is that if you control 51% of your company and/or the voting rights you can avoid a lot of headache and you can still be very generous with early people who join your mission.

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As an active investor in the Los Angeles technology market we’re always seeking to better understand the data and trends of why our market has grown so rapidly since 2009.

We look for pockets of excellence where we may have skills that aren’t native in other markets or where our home town may have some unique skills or talents.

Everybody now knows that LA produced SnapChat, Tinder and Maker Studios. They are getting a sense that as VR and AR become more an important part of the computing landscape that the history of film-making and camera innovations not to mention special effects and talent will continue  to propel LA’s tech market growth.

We set out to understand this market a little bit better along with our friends at CB Insights and I hope you find this data valuable as you try to understand the opportunity as it relates to your business. The report on the LA Tech Market can be found on this link.

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Amazon. It is a household name. It has become so synonymous with Internet companies that the French have invented a disdainful term including Amazon: “les GAFA,” which they refer to as Google-Apple-Facebook-Amazon to talk about American dominance of the Internet.

Try to imagine if you *didn’t* already know Amazon and the company walking into VC meetings telling people they were going to disrupt the selling of all goods starting with books but then extending into electronics, apparel, toys and so forth. It would hardly get a frothy reception for the first few years until it showed drones delivering the goods some 15 years later.

Amazon is emblematic of the sort of company that mostly disrupts industries *behind* the scenes. It wins through better distribution, logistics, inventory management, warehousing, customer support, merchandising, cross-selling and ultimately on price & scale. These are hard things to initially comprehend until you see them in full force as local retailers get wiped out due to their albatross of high real estate costs leading to either higher prices to consumers or lower margins on their p&l statements.

Thus Amazon’s market cap is $200 billion.

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I saw this Tweet recently by Scott Belsky, co-founder and CEO of Behance

conviction > consensus

— Scott Belsky (@scottbelsky) April 29, 2015

It spoke to me because it so resonates with my nearly daily advice to entrepreneurs and VCs alike. I went as far as to call it the best Tweet of 2015 so far because it encapsulated my advice so succinctly. He took two words where I take 1,000!

I am often asked how we make decisions on investments at Upfront Ventures. Every VC firm works differently but when asked about our process I always reply the same way,

We’re a “high conviction” shop

If a sponsoring partner is proposing a deal that is well within our strike zone in terms of check size, stage, tech sector and geography he our she will get the deal done if they have high conviction (and provided another partner doesn’t have super high-conviction in the opposite direction).

A typical investment discussion is not a bed of roses. A company presents. The sponsoring partner makes the case why they are in favor of the deal.

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