I’ve heard many investors and some executives repeat the mantra, “Never offer exclusive deals,” and since this blanket statement is generally bad advice I thought I’d offer the less conventional but I believe more practical version of why exclusive deals can actually be a huge bonus for a startup and why I actively encourage them.
So that we’re speaking the same language I would define “exclusive” as a period in which your company is prohibited from doing business with certain customers or business partners, which is why many incorrectly assume this is necessarily bad. I need to give credit for the topic to PR Malloy who Tweeted me this question. I must admit I discuss this very frequently with portfolio companies but hadn’t thought to write about it.
@msuster looking for an inspired post on when an exclusivity deal (w/ major industry player) works (cons as well) for an early stage tech co
— PR Malloy (@diddly_do_indy) June 13, 2015
The Mother of All Exclusivity Agreements – the iPhone Wouldn’t Exist
Before weighing in on the subject I would point out one thing that should be obvious to many of you – the iPhone was originally launched in 2007 in an exclusive partnership with AT&T and this was vital to both Apple and AT&T and was a hard negotiation throughout 2005 and 2006.
Between the mid nineties until 2007 wireless carriers around the world religiously protected the software that went on to phones and they guarded the end consumer relationship by controlling this software. If a company wanted to distribute software on a mobile device it need to sell via a “portal” (US term) or a “deck” (UK term) of a mobile carrier.
Obsession. The drive to succeed at all costs. When second place isn’t good enough because we live in winner-take-most markets. The desire to be better than anybody else in one’s field.
This blog started from a series of conversations I found myself having over and over again with founders and eventually decided I should just start writing them.It would often make my colleagues laugh because they’d hear me like a broken record and then the next week read my ramblings in a post.
Last week’s obsession was about obsession itself.
10 days ago I saw the film, Whiplash, which is one of my favorite films of the year. I would be shocked if it doesn’t win at least one Oscar. I won’t have any spoiler alerts here, don’t worry.
The protagonist in the film, Andrew, is a drummer and the story is his experiences in his freshman year of one of the most elite music conservatories in the country. He wants to compete to be the lead drummer in the competitive ensemble and study under Terence, an obsessive instructor who is hell bent on winning competitions for the school.
I absolutely loved the film. I loved the music.
The story on Uber has been written about ad nauseam, which is why I’ve been reluctant to weigh in. But enough people have asked my perspective so I decided to weigh in with my non-conformist view. I love Uber and I don’t believe there has yet been a real scandal. Grievances – yes. But scandal? I’m not so sure.
For starters – I’m not an investor in Uber. I wish I were. I had a chance to be in the seed round and unfortunately didn’t do so. I didn’t invest in any of their fine competitors either like Lyft, Sidecar, Hailo, etc. I have no overt biases (we all have subconscious ones). I’m not friends with Emil Michael – I’ve never met him.
This post is nothing than a bystanders attempt to put this situation in perspective.
1. Is Uber evil?
No. That’s silly. It’s a fantastic startup that has had a amazing impact on society. It’s not just about people like me who can (and do) turn up in nearly any city in the US and immediately book a ride. On that front it has revolutionized my life. No more 45-minute queues at airports, no more stuck in the rain with no ride.
I’m pretty on record as saying I don’t think many private-to-private tech mergers make sense. They are often done from a position of weakness. Something in both companies isn’t working, which is why they come together.
I often don’t believe in the therm M&A because in my experience mostly A works.
But of course there are always exceptions. And even when I remain skeptical sometimes opportunities present themselves that prove one should never be absolutist.
As many people know I funded a company called Moonfrye almost 2 years ago led by two amazing women – Kara Nortman & Soleil Moon Frye. Our goal from the outset was to build a great eCommerce experience that could compete with Michels on one side (for DIY / crafting) and Party City on the other (throwing events / parties / celebrations).
The thesis was simple. Mom’s struggle to plan events and activities for their kids. Most products out there suck so mom gets stuck with angst of wanting to have decorations, activities and chatzkies for other kids to take home. What should be an enjoyable experience turns into a time-suck obligation and angst-ridden day of self questioning.
Our product name is P.S.
We are often asked how companies get funded, why VCs make the decisions we make and what we’re looking for in entrepreneurs. I think this is a Seriously great example of how this process works for at least one VC – Upfront Ventures. But I’m guessing the narrative is similar elsewhere.
I first met Andrew Stalbow, the founder & CEO of Seriously in August of 2013. He hit me from two very trusted sources. On August 23rd, 2013 I had an email intro from my good friend and trusted source Jeff Berman who only sends me stuff when it is somebody he respects (ie a strong filter vs. those who send casual intros). On August 26th I had an equally effusive intro from Ynon Kreiz, also a friend, trusted source and also the CEO of portfolio company Maker Studios. So this was definitely an introduction I was going to take.
We met on August 28th, 2013 and I know this because literally the next day
An abbreviated version of this post appeared yesterday on TechCrunch.
If you want the full SlideShare deck with many slides not in either post it’s in this link –> The LA Tech Market
“There’s something going on in LA.”
It’s the most common refrain I hear from investors and even entrepreneurs these days. I hear it right after people have decided to come by for a few days to “check out what all the fuss is about.” I hear it when I visit LPs (the people who invest in VCs) all across the country, “Yeah, I haven’t been out there for a few years but I keep hearing that something is going on there.”
Or if you ask the venerable Greg Bettinelli, he’s