when a technology startup, its investors or the market believe in robust growth rates writ large
“the ecommerce company gained fauxmentum by raising artificially high amounts of venture capital and spent lavishly on customer acquisition despite long payback periods and questionable LTV”
We live in heady times. Startup companies continue to grow at unprecedented rates, raise enormous amounts of venture capital and achieve valuations that imply that they will continue to grow rapidly for the foreseeable future.
We can see in the market the telltale signs of a rapidly expanding market: wage inflation, high staff turn-over, rapidly increasing rents with scarcity of space and booming real estate market with prices and rents for homes unaffordable for many. I don’t meet many rational investors (VCs or LPs) who believe this will last but of course nobody knows whether we have 6 weeks, 6 months or 2 years.
A certain amount of the growth in today’s market is genuinely caused by the economic leaps that globally connected markets, widely available smart phones and frictionless commerce caused by the linking of our credit cards, bank accounts or crypto currencies to our phones for 1-click purchasing. On the other hand a certain amount of growth is fauxmentum caused by the over-funding of the startup markets and ebullient buyers of technology products (both businesses and consumers).
When the music does stop playing it will create a more jarring counter force than you feel when markets grow more sensibly.
Every year around the holidays journalists and bloggers around the world publish “top ten” lists or “annual buyer’s guides” or similar. And every year I think about doing the same. But it’s the holidays and I usually can’t be bothered. Plus, after reading everybody else’s list it feels pedestrian to publish mine.
So I thought now would be a sensible time – with six months on either side of the holidays. I’m not trying to say my picks are great and other products aren’t and I’ll certainly forget some. But this is just a reflection midway in June 2015 of the some of the products I love, enjoy or use frequently, and am not an investor in.
1. Twitter – Say what you want about Twitter “losing its way,” “not engaging new users well enough,” “not targeting ads well enough.” Twitter is the most fundamentally profound application I have used over the past decade. I love it. I will continue to love it. I sure hope nobody buys it. As an individual I’m just fine with its level of innovation. World leaders use it to break news. Comedians use it to hone their art.
Reid Hoffman (founder) and Jeff Weiner (CEO) of LinkedIn are amongst the most famous pair of founder / CEOs to buck the stereotypes that:
The only person who can take your company to it’s final destination or IPO if the founder
That the founder must leave the company if a new CEO comes on board
In fact, Reid wrote the definitive piece on the topic.
Many people don’t know that I actually became Chairman of my first company and relinquishing the CEO role before the company was sold. It’s a topic I’m well versed in personally and I understand the difficult emotional decision of whether to hand the reigns to someone else of the baby you’ve struggled so hard to launch into the world. Will they treat it with the same seriousness that you did through your years of blood, sweat and tears?
Some founders make great CEOs until the end, some don’t. And some (like me) love the first 5 years, first $30-50 million in revenue, leading the first 150 employees but don’t love the role after that point.
I recently interviewed Matt Mazzeo of Lowercase Capital. By now most of you know that Chris Sacca invested in what is now thought to be one of the best performing VC funds of all time having invested an $8.4 million fund in: Uber, Instagram, Docker and Twitter, amongst others. He then went on to build perhaps the largest single shareholding in Twitter. But did you ever wonder how Matt Mazzeo, who’s in his early 30s became Chris’s partner?
In many ways I wanted to focus on Matt because to those of us in the LA Venture community Matt really has become the public face of Lowercase Capital over the past several years. He has won many over (including me) through his hustle, his relationship, his service approach to venture and the fact that he is, frankly, a very likable and humble guy.
The viewer above (big thank you to ClipMine) will allow you to skip forward to key moments by clicking on the contents tab on the left but to give you some insights on Matt.
Crosscut Ventures has just announced their 3rd fund and clocking in at $75 million, which will be focused heavily on Los Angeles – FTW. A seed fund this size (and with increasing numbers of venture funds being raised by LA-based VC’s) has overcome a decade-long resistance and belief that you could only build great tech companies in Silicon Valley.
What you may not know is that the story of Crosscut itself is heavily correlated with that struggle for LA to have legitimacy as a national tech hub, which is now the fastest growing (and 3rd largest) in the US. Like many entrepreneurs, the founders of Crosscut quit their well-paid jobs in the belief that LA’s moment was about to arrive and they spent years on low (sometimes no) salaries to prove it.