Featuring Mark Suster, Investment Partner at GRP Partners.  You can find Mark’s insights into issues facing entrepreneurs, technologists and the venture capital industry at Both Sides of the Table.

Mark is on several Boards including RingRevenue, GumGum, Ad.ly and Burstly.  Mark is an Angel Investor in Affordit, ExpenseBay, EagleCrest Energy and several others companies.  Mark founded Launchpad LA, a mentorship program helping LA based companies get funding.  For more information on Mark you can visit his site, Both Sides of the Table.

SHOW NOTES

0:00:54 Mark’s Intro.  Mark has been an entrepreneur and is now an investor, hence the name of his blog Both Sides of the Table.

0:02:14  VCs not that great at marketing –hard to get to and don’t say much

0:02:33  Deal Flow?  Get about 25 emails about funding and about 100 emails for requests coffee/biz requests

0:03:51 Companies invested in RingRevenue, Ad.ly and others.

0:04:41 Sonos

0:05:31  2000 go.com became overture, ads clearly delineated

0:06:04  Foursquare valuation (full disclosure Jason is an angel investor of GoWalla)

0:07:08  BUZZ OF THE WEEK: $80M valuation for foursquare would you get in on it Mark?  Yahoo buying Foursquare for $100M?  Let’s check in.  Foursquares investor’s are Accel Partners, Adreessen Horowitz, Khosla Ventures and Redpoint Ventures.

0:07:25 VC industry splitting into 2 themes

0:08:50 Foursquare not yet mainstream

0:08:58  Dennis founded Dodgeball sold to Google

0:09:19  Would Google acquire same company twice (foursquare)

0:09:30 Rumor: Yahoo buying foursquare for $100M

0:09:50 Check ins have a shelf life.  Feature not a business.

0:10:21   Ideas -> Features -> Product -> Revenues -> Earnings -> Leads to a business

0:10:35  Foursquare – Currently in feature and early adopter phase and now has some business development deals.

0:10:58  Cellfire and mobile couponing companies lacking users who wanted to use the product.  Now with companies like foursquare people are engaged and companies can serve up relevant values. Will existing incumbents be able to compete with that ? Yelp moved to checkins and citysearch will probably move towards that

0:11:54  GRP a lot of bets at inflection point at $60M and comfortable when proof points are there.

0:12:11  VC like yours valuate foursquare at what amount?

0:12:55  Marc Andreessen estimates there are 6 to 10 important deals a year and as a VC have to be in on those deals.

0:13:20  VCs not always most creative.  Not the people who come up the idea.  Too many VCs looking at small number of companies give those signals every year.  VCs willing to pay 50% or 100% premiums on a small number of companies.

0:14:25  VC as an industry is filled with lemmings and invest in themes.  Hence the B2C pet food companies in the late 1990s.

0:15:51  Every entrepreneur trying to create a Groupon. Groupon is group buying, the crowd gets discount. Time based scarcity buying at a deep discount. Groupon Revenue numbers of Gross vs Net

0:16:55 Expedia do they really quote value of airline tickets when providing little value.  Expedia reports Net Revenue.  Gross is the total value of Good and Net Revenue is amount that you get in transaction.  Example, if Expedia sells the ticket at $1000 (gross) Expedia gets $10 (net).

0:18:05  Negative working capital take customers’ payment for product upfront and company does not pay for good for a period of time.  Company gets cash right away.

0:18:28  Upfronting money allows company to invest money in business without diluting equity.

0:18:59 Shout out to Chatroom

019:50  DEAL OF THE WEEK –  Quora raised $11M in Series A from Benchmark Capital for their Question and Answer site.  Valued at $86M.  Question and Answer site in a closed community, a social network type environment found by former FaceBook employees.  The who’s who of silicon valley.

0:20:33 Quora or plancast – you know who is using what in silicon valley?  Small closed networks and people using every day

0:20:48  Quora website (social network around Q&A – private network)

0:21:21  Full Disclosure  Mahalo same features as Quora

0:21:50  Similar company to Quora bought by Google.  Aardvark bought for $50M

0:22:07 Mahalo B round $100M

0:23:02 Why are people spending $86M on the valuation Quora?

0:23:28  Mark’s response limited supply of engineers/entrepreuneurs and really about the entrepreneurs

0:24:02 Benchmark investor -  Bill Gurley

0:24:34  Social Proof who are the angel investors (who get the price up)?  Mark Cuban, Jeff Clavier, Dave McClure, Kevin Rose, Chris Sacca

0:25:12  Social proof –signals of quality   Short hand for valuation; formerly called proofpoint

0:25:33  Quora – all the insiders are using it often.  Brilliant way to launch a startup in the valley and get get valley as customers

0:26:11 Unvarnish doing the same…..you get to slander others it’s the new juicy campus for adults

26:49  Chatroulette need to know about them and some of the other companies everyone is talking about

0:27:12  Want to invest in unfrothy – enterprise software – less VC focus on it, less competition from Entrepreneurs

0:28:45  Nate.com

0:29:15  Box Net raised $15M investors Scale Venture Partners, Draper Fisher Jurvetson , U.S. Ventures Partners .  Scale Venture Partners – Rob Theis and Sharon Wienbar  (sits on Board of Glu Mobile)

0:30:15  Difference between Associate, Principal, and Partner

Invest in a fund are limited partners the VCs of the VCs

General Partners  run a VC firm

Venture partners – normally are operators may bring some deals to table and lead some deal but not full partner, generally get better economics on the deal they brind and general partners share economics

Associate – involved in investment process they would not take the lead

Principal – investment professional not yet made partner

0:32:08  Take segment and send it to VCs (Mark) as CEO negative perception of VCs

0:33:18  If an associate is contacting you the VC is not really interested; if interested the partner calls

0:33:30 gdgt.com investors are Spark Capital, True Ventures, Betaworks, AOL Ventures, Lerer Media Ventures and other individuals.  Social network around gadgets, gagdet news websites engagdet, Gizmodo.  Social network around movies and books.

0:36:25  GRP just invested in Burstly open and free ad management platform for the mobile sector.  Mobile lacked infrastructure to allow mobile browser developers to make best decision about their inventory; can I drive in app purchases;  management performance.   Optimize ads you serve up ; analytics platform and manage and optimize performance of inventory around  app purchases, cross sales, install of other apps.  How do they make money?

0:39:14  Burstly $1.8 M  Series A from GRP and Ringcon Venture….valuation – under $10M.  Third time entrepreneur Evan Rifkin angel investor in adconion.

0:40:30 During the show we did not talk about IPOs.  Last year opentable had their IPO, Tesla filed for IPO

0:42:38  To IPO a company should have $70M+ in revenues and earnings $10-20M

0:43:29 mezzanine financing

0:43:55 better to not IPO, when IPO public disclosure

0:44:27  Audience Send Feedback on show

0:44:44  No Q&A with audience this time around

0:45:20  Will Yahoo buy fourquare?

0:46:18  Charlie O’Donell his blog This is going to be BIG

0:46:40  Mark Suster  – Both Sides of the Table and @msuster

0:47:00 Disaster of the Week Bebo