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Why I Look for High Conviction, not Consensus, in Venture Capital Decisions

Why I Look for High Conviction, not Consensus, in Venture Capital Decisions Bothsidesofthetable Sep 26, 2015

One of the least understood parts of the venture capital industry and venture capital firms is how investment decisions actually get made. The truth is that each firm is different and there isn’t one standard but over the years I’ve talked with enough of my peers to get sense of how many firms work. Often […]

What Should You Make of the Web Summit Controversy? A View Behind the Scenes Bothsidesofthetable Oct 2, 2015

Like many of you I read the Is Web Summit a Scam article making the rounds this week. I have attended Web Summits three times – it is not a scam. Let me get that out of the way. It’s a big conference and all big conferences charge money, make money and serve a diverse set […]

What Can You Do if a VC Pulls Their Term Sheet?

What Can You Do if a VC Pulls Their Term Sheet? Bothsidesofthetable Oct 1, 2015

What Can You Do if a VC Pulls Their Term Sheet? I was asked to answer this exact question on Quora and I did so some time ago. The beauty of evergreen content is that it resurfaces all the time and it is as relevant today as it was years ago when I answered it. […]

Tips for Investing in Startups if You're a Celebrity Thisisgoingtobebig Sep 30, 2015

I've wanted to write this post for a while, but now that my friend Beth has joined WME, feels like the perfect time to do it.

I don't really know many celebrities. If I threw a dinner party in NYC, I think I could get Morgan Spurlock, Gabrielle Corcos & Debi Mazar, Carmelo Anthony, and maybe former Met pitcher Glendon Rusch if he happened to be in NYC as we're randomly Twitter friends. I met Brooke Shields a few times at the Union Square Hyatt where she was holed away writing her recent book. She was lovely, and doesn't look a day over 35 without makeup, in case you're curious.

That's about where I top out, though--so I don't pretend to know what it's like to be a celebrity.

Celebrities should also know that money and fame doesn't automatically make them qualified to be investors. Some of them appear to be very good investors, though--and some investors are borderline celebrities. Crossing over is hard on both accounts, so here's some tips for people who have broken through the 15 minute fame barrier.

Investing in startups is hard and it's going to be hard for you, too. Don't think that everything you touch is going to be the next Uber. Ubers come around once in a generation and while it seems like a lot of celeb investors are doing well, there are a TON of bad deals no one ever shares. It's like the stock market. Everyone seems to be making money all the time, right? Respect my craft and I'll respect yours. Find some partners that you trust who do this kind of thing all the time. Do you know who the worst people in the world are? The trusted celeb manager who doesn't know anything about startups, never made an angel investment before, and thinks they're big shit because some celeb picked them out of a hat to look at deals for them. I'm sorry, but I can't take those people seriously. Celebs are better off investing in a few funds and working with the VCs in those funds that they've built a trusted relationship with to vet deals for them.Don't ask for a s [...]

Why I Fucking Hate Unicorns and the Culture They Breed Bothsidesofthetable Sep 28, 2015

Something is rotten in tech startup land. Don’t call me a hater for saying so. It’s not that I’m anti innovation or a disbeliever in disruption or calling it a full-scale bubble or saying every darling startup is going to fail. None of those. Still. Somebody posted too many party fliers. The uninvited crowds have […]

Leave Money on the Table Thisisgoingtobebig Sep 23, 2015

I was having a conversation last night with another VC who was suggesting I monetize the pro-ratas that I don't take by creating SPVs. As a small fund, I've been writing one check only to a company to help get them off the ground that that has served me really well so far.

"But you could charge fees or at least carry for that... You're leaving money on the table!" he said.

I said, "Dude, I run an $8 million fund and I'm about to finish raising a $15 million fund. I'm the King of Leaving Money on the Table."

For me, I'd rather have a very simple, straightforward business model--one where no one has to think to figure out if I'm giving advice on your next round based on some special vehicle or deal I have on the side.

It made me think of an investment I just made where the entrepreneur found an extremely profitable niche that he is already taking advantage of. He was pretty flexible about terms because he felt like he was going to make so much money that the terms of the deal didn't really make that much of a difference.

My favorite ice cream shop, Ample Hills Creamery, has some flavors that are less profitable than others--but that doesn't stop the shop from making them. They could probably make more money replacing these flavors with simpler ones, but they wouldn't be Ample Hills if they did.

That's the kind of company you want to fund as an investor--not something that only gets big when you need to squeeze every last dime out of the opportunity. You're never going to be able to do that as a startup, and often times that comes at the expense of your user experience and happiness.

Same thing happens with people.

Who wants to be around someone who counts every last penny and never misses an opportunity to cash in.

Those aren't the kind of people I want to be around and it's not the kind of relationship I want to have with a company. It's definitely not the kind of relationship I want to have as an investor.

Here’s Why We Fell in Love with Draft

Here’s Why We Fell in Love with Draft Bothsidesofthetable Sep 10, 2015

My partner Greg Bettinelli is an avid sports fan who throughout his career has developed an expert understanding in online ticketing (at eBay has was a champion of the StubHub acquisition) and online marketing. Greg knows consumer businesses and customers, which has added tremendously to our team where I admittedly have more of a background in […]

Why I Stopped Taking My Mobile Phone to My Bedroom

Why I Stopped Taking My Mobile Phone to My Bedroom Bothsidesofthetable Aug 31, 2015

Technology. It has been a hobby of mine since 1981 when […]

What You Could Learn from @John About Teens and Social Media

What You Could Learn from @John About Teens and Social Media Bothsidesofthetable Sep 11, 2015

When most people think of John Shahidi two words come to mind. Bieber & Mayweather. Yes, that Bieber (67 million Twitter followers, 73 million on FB) & that Mayweather (6.4 million Twitter followers, 12 million on FB). The reason being – John Shahidi counts both as investors and friends. So. You’re probably thinking, “slick talking, […]

Why the Public Stock Markets Will Affect Your Funding Round Even if You Can’t Perceive It

Why the Public Stock Markets Will Affect Your Funding Round Even if You Can’t Perceive It Bothsidesofthetable Aug 25, 2015

Last night I wrote a post about how the fall in the sto […]

The Nature of Greatness Thisisgoingtobebig Sep 14, 2015

I was talking to someone recently about striving and desiring to be great at what you do. That brought up the question of what makes someone truly great at something.

We refer to people as "great entrepreneurs" in the startup community all the time--but are they? I've noted for a long time that too many people have untested, hollow reputations based on things like social proof that go untested. How many founders have made hires, especially consultants, who were supposed to be great that didn't turn out to be? Ask around for recommendations of who is great at marketing, PR, or anything else and you'll get lots of answers--and probably few of these folks have actually achieved "greatness".

So what makes someone great?

In sports, when I think of greatness, Greg Maddux is who comes to mind. It wasn't so much that he was successful. A lot of people have great stats. It was the nature of his success.

Maddux seemed to understand how the machine worked better than anyone else. It was like someone gave him the instruction manual on how to pitch and no one else had it. He would count in his head how long fly balls were in the air, and get annoyed if he got to a certain count and the ball wasn't caught--because an outfielder should be able to get to a ball staying in the air for a certain amount of time.

One time, he was sitting next to a player in the dugout and told him that he should move or he's going to get hit with a foul ball on the next pitch. Sure enough, the very next pitch sent a screamer his way.

The great ones have a deep working knowledge of the systems around them that they are able to exploit for their own purposes.

This next one is easy. If you're truly great, then mastery on your level is rare. If everyone is doing what you're doing, then how hard could it really be. When Babe Ruth hit more home runs than any other American League *team* did at the time, that was pretty serious. When you can't think of anyone else doing the kinds of thing [...]

Be Someone that People Want to Work With Thisisgoingtobebig Sep 1, 2015

I mentioned this in my newsletter yesterday and decided to make a post out of it.

People ask me all the time how you find talent, money, etc.

My startup Golden Rule is this:

Be someone that people want to work with.

That's how you get funded. That's how you get hired and how you can hire the best people. It's why you get press and even how to get customers.

It's key to getting into venture capital.

If you were driven to be the very best person anyone could ever hope to work with, you'd go on to do amazing things.

That means you'd have a skill to offer--one that you strive to improve on everyday. You're constantly learning. You listen. You're well connected. You're pleasant. You're curious. You're calm under pressure. You work both smart and hard. You're thoughtful. You enjoy helping others and want them to succeed. You are innovative. You aren't stuck in your thinking.

When I set out to raise my next fund (which is thankfully going quite well), I wrote the deck based on why I thought others would want to work with me--because it seemed like the only important question you had to ask when considering a VC.

Follow anything more specific and you run the risk of losing the context of why something worked for someone else.

Making Sense of the Stock Market Drops in Relation to Venture Financing

Making Sense of the Stock Market Drops in Relation to Venture Financing Bothsidesofthetable Aug 25, 2015

If you didn’t notice that the stock markets in th […]

What I’ve Learned About Venture Funding

What I’ve Learned About Venture Funding Bothsidesofthetable Aug 21, 2015

VC funding. Our perspectives on the topic wax and wane […]

What to Make of Amazon’s Work Practices? Bothsidesofthetable Aug 18, 2015

There is much discussion about this weekend’s art […]

Personal update- I’m joining Uber! Here’s why

Personal update- I’m joining Uber! Here’s why Andrewchen Aug 24, 2015

Hi readers, Big news: I’m headed to Uber to join the supply growth team. I’m incredibly excited to apply everything I know about growth and combine that with an explosive company on a historic trajectory. My new role will head up everything related to driver signups, referral programs, and top-of-funnel for the supply side. I’m lucky to join the incredible team at […]

The post Personal update- I’m joining Uber! Here’s why appeared first on andrewchen.

An Early-Stage Founder’s Quick & Dirty Guide To Growth

An Early-Stage Founder’s Quick & Dirty Guide To Growth Onstartups Aug 5, 2015

The following is a guest post by William Griggs. William is the Founder of Startup Slingshot, the resource for battle-tested startup strategies. Access the audio interviews of today’s featured growth practitioners, the full 43 page guide, and tons of resources here (free for now).

My One Wish For All Startup Employees Bothsidesofthetable Aug 18, 2015

This summer I had the extreme pleasure of watching one […]

The Idea Stage is Broken and a Tool to Fix It Thisisgoingtobebig Aug 17, 2015

Almost a majority of the time, when I pass on an investment opportunity, there's something wrong with the company that can be traced back to the moment the entrepreneur came up with the idea. I find myself thinking, "You should really be doing something else."

People are excited about the idea of starting a company, but don't spend nearly enough time vetting what to work on. Frankly, I'm sceptical that the "picking an idea" thing has any decent likelihood of working out, versus having an idea pick you.

What's your answer to "Did you pick this idea or did this idea pick you?"

If you're having trouble sussing out an idea at the very earliest of stages, or you feel like you have something to offer, but you're not sure what to work on, try this exercise on for size.

It will help you figure out why you're doing something, what you bring to the table to an unknown thing, and how to start thinking about pacing your progress.


BackgroundI want to… (choose one)

create something, improve something

I have an… (choose any that apply)

interest, observation, opportunity, idea, question, asset, skill, goal, company, product, problem

Why now? (rank these)

Personal time limitation
Money constraint/opportunity
Career window
Market timing


Status Currently, I am [working full time/working part time/exploring/practicing/researching/improving] [name of the field or job].

I have been doing this for [x] [days/months/years].

I currently spend [x] hours per week doing this.

This is a time-sensitive endeavor (y or n)
If y, there is a time period that this needs to be executed within

I am working on this [alone/with others].

I [do/do not] make money doing this.

I [do/do not] make enough money doing this to sustain my lifestyle.

I [would/would not] like to work on this full time.

I am sure that this is something I should be pursuing (agree/disagree)

I have a clear sense of the things I need to do to succeed or improve. (ag [...]

10 Surefire Ways to Increase Your Chance of Startup Failure Thisisgoingtobebig Aug 13, 2015

1. Don't bother creating any kind of cash flow model, because it's bullshit, right?

2. Overestimate the value and volume of the "data" that you'll collect when lots of users are on your platform.

3. Assume that lots of users will be using your platform when you don't even have a good plan to get the first 500.

4. Skip talking to the specific person at that big customer who you believe will one day spend lots of money on your platform.

5. Copy the strategies of Facebook, Twitter, Snapchat, Instagram, Uber, etc., because you fail to realize that those companies were developed in completely different competitive environments and also raised hundreds of millions, even billions of dollars in VC money to get where they're going.

6. Think of yourself as the "Uber for" when you don't even understand what makes Uber "Uber"--namely a commoditized, interchangeable workforce performing singular tasks whose demand is unpredictable geographically and schedulewise, that had lots of unused inventory.

7. Fail to appreciate what product management is--because you think that all you need is a technical co-founder to build something that people love.

8. Fail to understand the relationship between continuing to hire salespeople and growing your revenues, and fail to figure out what the payback is on hiring an additional salesperson.

9. Thinking that PR alone is going to get you millions of users.

10. Worrying about dilution and not raising enough money early on, and then raising far too much money later once you're successful--so much that you can't get out from under it.

What to Expect When You're Expecting Venture Capital Returns Thisisgoingtobebig Jul 30, 2015

One of the first things I did when I joined the venture asset class as a lowly institutional LP analyst in 2001 was to build the VC fund cashflow model. Just about every analyst who looks at fund investing has built one. You incorporate expected company returns, mortality rates, and fee structures to try to predict how a venture capital fund works from a cash in, cash out, and NAV standpoint.

It's basically the unifying theory behind all your assumptions about 10% of the investments driving most of the returns, needing certain multiples of return, and the basics of how many deals you do a year, with fees layered on.

Let's be clear about this exercise. It's not perfect. There are all sorts of wacky cludges and hacks in it, like the idea that every company performs exactly the same over time, because you don't know *when* the winners and losers happen. You wind up with a Schroedinger's Cat type model where you invest in a company and it partially dies and partially exits over time. This way, you smooth out all the lumpiness of time when multiplied out across 30 or so deals. And no, the numbers don't exactly add up--but they're more than close enough for venture capital.

It's also not the "average fund". You don't want the "average" fund, because average funds don't do well--just like you don't want to model the average startup, because you might as well draw a big flaming hole in the ground. Venture capital is all about finding the extraordinary. It's about building the exceptions.

On the other hand, you can't exactly model out being in Accel Facebook fund, the First Round Uber fund, or the Lowercase Twitter fund. So when you think about returns, what should you expect.

What I tried to model out is "institutional quality" funds--funds that have access to winners--those winners being "normal", however. Not unicorns necessarily, which require the suspension of reality to believe you can consistently pick them.

The average VC-backed exit is somewhere ar [...]

Survivors Bothsidesofthetable Jul 30, 2015

Failure. To most people it smells. People are afraid of […]

What You Can Learn from a Scorpion Bothsidesofthetable Jul 26, 2015

The hardest thing about starting a company is that from […]

Backing someone pre-pitch: The story of how I backed Clubhouse Thisisgoingtobebig Jul 22, 2015

I'm excited to be able to finally announce Brooklyn Bridge Ventures' investment in Clubhouse, a company I agreed to back before I even knew what it was.

In 2010, a bunch of techies got together to do the next year's NYC Triathlon. I had already done two and was looking forward to joining people from the tech community.

It was also right around that time when I started CTO School--a small five session series on how to go from being a developer to a technical leader, which blossomed into a not only a very active meetup, but also gave birth to a great conference series as well.

Of course, I had no business starting such a group, so I enlisted the help of some people I had met through the community--like my fellow triathlete Kurt Schrader, who was, at the time, leading tech for Intent Media.

Kurt is a no-nonsense guy with fantastic experience growing and managing technical teams. He's direct, focused, and he gave me great feedback on what to teach about how to get teams working together at scale--so great that I roped him into giving the talk, and eventually co-founding the meetup group that CTO School became.

We stayed in touch, doing a couple of tris together, chatting about startups, and venture, life, etc. I was really impressed with his ability to distill things down to what was really important--and his constructively critical eye when it came to the buzz around products that most people just didn't need.

So when we grabbed dinner about a year ago and he told me he gave notice, and that he had a guy working on a thing (that guy was his co-founder Andrew Childs), I just said "I'm in."

I didn't even know what he was working on--but Kurt isn't the kind of guy that wastes his time on some Uber for moustache grooming app. For him to leave a great job at a growing company where he had become CTO, it had to be real. Kurt is the kind of founder you back whenever they're working on something, and I've had a lot of success backing pre-product founders l [...]

The Loneliness of Success that Nobody Talks About

The Loneliness of Success that Nobody Talks About Bothsidesofthetable Jul 19, 2015

Yesterday I saw two biopic films: “Amy” abo […]

How the Hell do I Prioritize Work, Blog & Find Balance?

How the Hell do I Prioritize Work, Blog & Find Balance? Bothsidesofthetable Jul 14, 2015

I noticed this post today from Ezra Galston titled R […]

When doing the right thing by people is also the better business model: Why I backed Homer Logistics Thisisgoingtobebig Jul 21, 2015

Late last year, Adam Price opened by eyes to a group invisible to most New Yorkers--bicycling food delivery guys. He told me about how they get their jobs, what they make, how they make it, and about all of the various problems that come with being a 1099 worker--or being completely off the books.

He told me months and months ago, before anything came out about Uber's workforce, how it was never going to work in a world of increased "on demand" services. He outlined some of the issues in a recent blog post:

Using 1099 workers--people who, by definition, you can't tell where and when to be at a certain spot, is inherently inefficient. The explosion in on demand apps and services meant that any retailer or restaurant didn't just have one firehose of demand to drink from--they had eight. These small businesses needed a single delivery solution in order to focus on what they do best--whether it's making food or curating products to sell in a store. That's what Homer is. It's not a B2C company. You order from Seamless or wherever the way you normally do, and the restaurant turns the delicious meal over to Homer, the delivery experts. This way, Homer doesn't have to raise hundreds of millions of venture capital dollars to change consumer ordering behavior.

He created Homer in order to solve those logistics problems, but he was especially proud of another problem that he solved:

These delivery workers were highly underpaid--because they were working off of tips and were highly underutilized. When you have a single shop that has varied demand throughout the day, the amount of money you can make delivering is really low. Sometimes, you'll get zero orders in an hour and you'll just be stuck with the $5 wage you're being paid--if that.

What happens when you start batching all of these orders across restaurants is that now you're getting two, three, four, or even five orders, not just in peak orders--but every hour--and sometimes more. Now you're pushing hourly w [...]

Bill DeBlasio's Uber targeting is in danger of making NYC a tech joke Thisisgoingtobebig Jul 15, 2015

Mayor Bill DeBlasio is on the verge of making NYC one of the most unfriendly cities in the world for technology companies to operate.

It first started with Airbnb, which got caught in a crackdown aimed at people who turn "affordable" residential housing into full time hotel space. Don't concern yourself with the fact that Airbnb is simply an outgrowth of the lack of affordable housing--where no one would ever bother renting out their place if they didn't have to struggle to afford to live here. Don't concern yourself with the fact that it's the city that green lights all of the luxury condos going up all over the city in place of reasonable housing.

They could have created a reasonable, nuanced set of rules that allows me to rent my place out when I'm not there, like the four times a year I'm out in San Francisco trying to convince valley VCs to invest here, to someone who needs it. Most of these renters are tourists who contribute to the NYC economy and who can't afford $450 a night for a hotel--people we should be aiming to attract. Instead, the baby got thrown out with the bathwater here and renting your whole place is illegal.

And now, our anti-tech progress Mayor is helping NYC join an exclusive list of cities that have stood in the way of Uber providing an innovative consumer service that is in high demand.

Regardless of how you feel about Uber as a company or their management, it's really hard to argue that New Yorkers don't want this service. It's also hard to argue that anyone who supports NYC's tech community wouldn't have rather had Uber build their company here versus in San Francisco. Uber employs 3000 people, more than most startups in NYC do, and is only six years old. Same with Airbnb. Imagine what the NYC tech community would be like had Uber and Airbnb grown up here.

Well, what are the chances of that given our anti-innovation policies regarding these two companies?

Would NYC rather be on the side of innovation, or the side of the [...]

How Many Angels is the Right Amount for a Startup to Have? Bothsidesofthetable Jul 8, 2015

If you follow the Twittersphere you may have noticed se […]