Episode 0 2
This Week in Venture Capital #2 with Mark Suster
This Week in Venture Capital #2 with Mark Suster
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.
VC financings
April 5-13, 2010
0:00:52 High Profile Deal of the Week: TweetUp
“Adsense for Twitter”
$3.5 mm in Series A; no valuation disclosed
Bill Gross founded Overture and ran IdealLab, came up w/sponsored search
Howard Morgan of First Round Capital
0:03:55 Mark: “Building Ad Sense of people”
0:04:25 Mark: “Bill Gross is the the Jeff Bezos of LA”
0:04:51 Danny Rimer know for skype, MySQL deals
0:05:26 “No one was talking about Index 10yrs ago. Danny in U.S. considered in top tier.”
0:05:37 Danny Rimer’s Deals Rightscale, Stardoll, OpenX, Sonos, Netvibes
0:6:11 Mark: “Tweet up horrible name – it’s a meetup, tweetup means something totally different”
Golden rule of branding:
1. Choose a name that is your url
2. Do not choose anything that paints yourself in the corner
**Prediction it will be named something different
0:06:55 What hurt GoTo.com? Google had organic traffic and had affiliate network adsene & adwords. Applied semantics (bought by google). Goto.com did not have organic place to do search.
0:07:55 Twitter based network like this and Twitter will monetize through their search and paid ads and that will have cost advantage through distributed model.
0:08:30 Investing in the jockey, race and horse. Bill Gross is the jockey, social advertising is the race, the horse can be changed.
0:09:00 Bill still has something to prove
0:09:20 Launched IRC channel irc.thisweekin.com – #venturecapital #startups #android #apple #twitter #cloudcomputing You can find a Tutorial here.
M&A Discussion
0:10:13 M&A deal of the week ATEBITS
Twitter acquisition of Tweetie
Atebits dba Tweetie (acquired by Twitter)
Twitter application for iPhone platform
0:10:37 Tweets consumed on clients more than on twitters website
0:10:53 Mark: “I consume on the web twitter.com and ubertwitter”
0:11:26 Mark: Seesmic & tweetdeck on record in September 2009 with Guy Kawasaki “that Twitter would buy Seesmic”
0:12:11 “Whenever we have an investment or interest it will be disclosed” – Jason
0:12:25 Twitter developer community big falling out not acquisition but communication of acquisition; Fred Wilson — provide more value than just Twitter client…. “filling holes”
0:13:05 Mark: “Anyone who builds entire business on someone else’s API is not building a real is not an entrepreneur …adjunct businesses being build to flip terrible idea as an entrepreneur unless you can build something sustainable and bigger…Zynga being the perfect example. Zynga trancends Facebook.”
0:13:51 Mark: Wrote on my blog “I believe entrepreneurs need to view things like Twitter as distribution channel not as a business” (same as iPhone too many developers dependent on apple; salesforce) If you don’t have strengths in other channels you are screwed.
0:14:13 Ad.ly commitment to be multi-streamed. Ad.ly working hard to be multi-streamed.
0:14:20 Jason: “You are speaking on behalf of Adl.y as VC?”
0:14:40 Jason: Fred Wilson speaking on behalf of Twitter and taking heat off Ev and Biz. Proper relationship of a venture capital when speaking on behalf of a portfolio company?
0:15:05 Mark: “Only speak on behalf of publicly available information
generally speaking with knowledge of consent from the team. People trust me, been talking publically for 10years-15years
0:16:25 Mark: “Most VCs publically bad at talking in general. Fred Wilson is phenomenal.”
0:16:31 Value added – people want to have a Fred Wilson to use him as a communication tool, pawn, blocker.
0:16:47 Mark: VC needs to be a megaphone VC talking about portfolio in a positive way. “Part of my job is to be an advocate”
0:17:07 Twitter buys Tweetie they did not but Blackberry client (built with RIM)…buying a person? Why buying it instead of building it?
0:18:40 Mark: “Venture Capital there’s no science in it it’s what kind of deal we can get.” Bought tweetie for engineering talent that came with it , 1 person and got right price.
0:18:57 Mark: “Twitter is going to continue to build and buy and fill in holes….be careful you are not just a hole filler”
PLUS RELATED FUNDING …
0:19:19 TweetPhoto
Real-time photo sharing platform
$2.6mm in Series A security; no valuation given
twitpic, yfrog should be part of twitter platform
Bill Woodward of Anthem
0:19:52 Promoted Tweets — Starbucks ad appears in some yfrog link to photo showing a bunch of espresso. making twitter as platform multi media which it should will have video and images
0:20:20 Starbucks promoted tweets, “sending it to content and making it feel real as opposed to an ad”
0:21:02 Mark “do not want to speak to whether it is a good ad purchase”
0:21:30 Jason and Mark: on Starbucks promoted Tweet “show this tweet on your phone and get a coupon…will be a couponing platform and location based platform compete w/gowalla (full disclosure Jason is an investor in) and foursquare”
0:21:51 Concerns about investment Tweetphoto very much a hole filler
0:22:22 Photobucket should have been a hole filler bought by myspace; youtube hole filler
0:22:62 Tweetphoto may be a good investment $2.6mm in Series A. average A round is what type of valuation? $4M to $5M premoney. About $7M or $8 post million so 25% to 33% VC owns
0:24:02 Tweetphoto may have a plan to expand beyond
Other Deals
0:24:07 Groupon
Hyper local same-day offers
$TBD mm in Series C; $1.2 billion pre-money
Rumored: Digital Sky Technologies
0:25:32 Large pool of capital. These kind of deals grossly undervalued. US venture capital has capital constraints sources have dried up – university/pensions Limited Partners…becoming impossible to raise money
0:26:15 Mark: Capital Calls – raise money from limited partners 3 or 5 year cycle and that money legally committed to you it’s not like we do not have money to do existing investments. Legal commitment there are some defaults in 2008 and 2009 if they do not make their capital calls they lose position in previous company.
0:27:25 Do I want to piss off LPs or give them slack?
0:27:49 Mark: “Entrepreneurs do not feel we have same pressure?”
0:28:02 Jason and Mark: How often do capital calls happen? In 2008 2009 and 2001-2002 only during really big crash periods
0:28:22 Mark: “Any VC who complains about being a VC is a baby”
0:2854 Mark: “At the end of your fund if you have $300M and invested $200M that $100M reserved for follow on investment (dry powder) for existing portfolio, which means they may not do a whole lot of investing. Ventured Capital as an industry has underperformed relative to expectations. VC is rightsizing.”
0:29:55 Mar: “DST mad geniuses”
0:30:36 DST the way for employees to move shares? They are buying from insiders?
0:30:52 History of Venture Capital backed companies is you raised money in business for 6 or 7 years and IPO’d when you have been profitable for 8 quarters In the late 1990s everyone IPO’d . 1990s Chemdex, VerticalNet and Internet Capital Group (ebay of every single market), was a an evergreen VC
0:31:48 Evergreen VC – makes profits and reinvests
Regular VCs raise funds and take those funds close and return money to LPs and new funds
0:3211 Berkshire Hathaway
0:33:00 IPO’d hard to IPO companies the constraints on selling very high. M&A has dried up less buyers.
0:33:37 Groupon $1.2 billion pre-money. Hundreds of millions in Revenue.
0:34:55 EBITDA and Gross value a company
0:34:37 Stitcher
San Francisco-based service that lets users customize talk radio programming on their mobile devices
Investors:
Benchmark Capital (Bob Kagle); with participation from insiders New Atlantic Ventures and angels Ron Conway and Ed Scott
0:36:05 Jelli in San Francisco – go to internet and vote songs to go on the air
0:37:51 internet radio becoming big business; monetizing it well Target Spot (Union Square Ventures)
0:38:07 Tiny Speck
Stewart Butterfield Co-Founder of flickr; Online gaming start-up
$5mm in Series A; no valuation disclosed
39:14 Web based casual gaming. Glitch is 1st game from Tiny Speck
Online gaming start-up
$5mm in Series A; no valuation disclosed
0:44:26 Quirky
Platform facilitating collaborative design of consumer products through an online community
RRE Ventures (James Robinson, IV), Village Ventures, Contour Venture Partners, and Lowercase Capital
Company links EdgeCast (competes with Akamai and Limelight)
Check out Mark Suster’s Recap of the show on Both Sides of the Table
- Ryan Clarke
- Chris Boesing
- http://www.maciejgluszek.com/blog/ Maciek
- http://willmontanaro.com Monty
- Sachin
- Prab
- http://twitter.com/fritjofsson Carl Fritjofsson
- http://www.leemallon.com Lee
- roberta
- roberta
- http://twitter.com/3en Ben Reyes
- http://willmontanaro.com Monty
- http://influads.com Anibal Damiao
- Ryan Clarke
- http://www.twitter.com/entrepranu Greg
- Jens
- Frank
- http://kahlillechelt.com Kahlil Lechelt
- http://labadens.fr/blog/2010/04/16/la-bilan-de-la-semaine-2/ La bilan de la semaine #2 « Labadens Blog
- roberta
- http://WhichDateWorks.com Jason
- http://www.justinherrick.com Justin Herrick
- http://www.jamestheiii.com James O’Connor
- Anthony D
- Peter
- http://twetailer.com Steven Milstein
- DAVID FAJUYITAN
- http://iconology.therndm.com JRameau
- http://www.thestartupreader.com Jeffrey Talajic
- Tim
- Harry van der Veen
