Both Sides of the Table


Why I’m Now Long NPR

Why I’m Now Long NPR


Posted on May 10, 2014 | 0 comments

Anyone who knows me well knows that I have a few brands & media properties that I truly love and for which I have huge loyalty. Virgin America. Uber. USAA. Jon Stewart. Fareed Zakaria. David Brooks.

And NPR.

NPR has been a part of my life for 25 years. As a news junkie and seeker of information, I’m that guy who always has his car tuned to KPCC everyday to get my daily dose of NPR. I know that everybody has their particular politics and I’m certainly not trying to espouse one point-of-view over the other in this post. But I find NPR and BBC to be some of the most thoughtful, unbiased and far-reaching (in topics) sources of mass-reach information that exist.

On road trips my wife fires up the app on her iPhone so we can stream Morning Edition, All Things Considered, Fresh Air or MarketPlace. One weekends sometimes I’ll zone out to “Wait, Wait, Don’t Tell me” and laugh along. The shows are smart, clean, intellectual and thoughtful.

Car radio is a pure pleasure to me because it’s 25 minutes of unfettered thinking and listening time and a chance to make sure I ¬†know about the world around me before the daily grind of work or the evening onslaught of kids and family responsibilities.

At times I worry about NPR because I’m guessing the audience is aging alongside me. Technology is disrupting all types of media and talk radio will be no exception. In-car technologies for streaming will likely erode the channel and day-part stronghold that the major shows have always had and young people are tuning into SoundCloud, YouTube, Spotify and other sources that battle for “share of mind.” Staying relevant will require leadership.

And of course there are virulent debates about whether publicly funded media should exist at all. I fall firmly on the side of supporting public funds for quality, less-biased, programming.

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Amazon. It’s the company that evokes fear into more startups and venture capitalists looking to fund eCommerce businesses than any other potential competitor. Every pitch I’ve ever seen has led to the, “Would Amazon eventually do this? And could we then compete?” type questions.

But what if you could do the reverse of Amazon?

Amazon was early in spotting a macro trend – that physical, local retail had a few key disadvantages. The first is that it could carry limited inventory in stock because it had limited physical shelf space. The second is that the retailers were constrained by their high costs of local real estate and service staff relative to the costs of centralized warehouses where goods could be stacked high, sorted by robots, managed by RFIDs and then shipped via overnight to eager, cost-conscious customers across the US.

Today’s $24 billion storage market in the US has these same key disadvantages and that was the genesis of Sam Rosen’s initial idea for MakeSpace, which I initially funded 15 months ago.

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I was having dinner with a friend last night and we were chatting about venture capital and a bit about what I’ve learned. I started in 2007 with a thesis that my primary investment decision would be about the team (70%) and only afterward about the market opportunity (30%).

I was telling him that it was much easier when I started because there were fewer deals, life was less public and somehow the world seemed to be spinning more slowly. A year into my tenure the world went into economic collapse and that seemed to dominate the consciousness more than which deals one was chasing.

Today we’re in a world where 10 accelerators are bombarding you with emails to meet their 10-15 companies. Seed investors are aplenty and of course they need downstream money to fuel their early-stage bets. Angels have been prolific for years now and they, too, rely on downstream money to cover their bets.

And we live in public so many people are able just to reach out.

And there’s conferences. Oh, the conferences. Disrupt. Recode. Web Summit. Collision. Fortune Brainstorm. Lobby.

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One of the interesting things about being a VC is that you often see companies in transition. If you’re an early investor like I am that often means writing the first $2-3 million check into a business that previously had either survived on fumes or on a $500,000 angel round.

I also see companies as they move from having taken $1-5 million from me to their next round where they raise $8-15 million from Series B investors and sometimes I lead at this round (we’re stage agnostic but 80% of our deals are seed & A).

Moving from a company that had less resources (and presumably by the time they’re raising depleted resources) to a company with newfound resources can be telling.

I have seen many companies raise their first $3 million and still act like a company that has no resources at all. And while this might sound to the inexperienced person like a sensible idea – it is not. In a VC business when you raise additional capital you need to “level up” and act the round you are.

Of course I’m not preaching crazy, irrational spend or having Kid Rock at your next company party. But you do need to find a way to do activities that are more scalable.

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Reference calls. We all have to make them. Whether you’re considering hiring a new employee or as an investor whether you’re looking to do a background check on the founders of a company.

My friend Jason Hirschhorn Tweeted about this today

References on hires are often useless.

— Jason Hirschhorn (@JasonHirschhorn) April 6, 2014

1. Ask for at least 5 references
As your candidate for at least 5 references. You specifically want to ask for people who have directly worked with the person before. I like to get a mix of people who have reported to the candidate, whom the candidate has reported to (2x) and peers.

Don’t worry about the fact that these are the references that the candidate has hand-picked – that’s part of the process. I would start by asking the candidate, “How did you decide on these five people” as part of your review process.

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