It catches many founders by surprise, but one of the hardest pitches to a venture capital firm is actually the pitch to your current investors. My friend Rob Go wrote about this not long ago, but it comes up regularly so I wanted to tackle some successful strategies I’ve seen.
The most common reason founders end up presenting to their current VCs is when raising a new round of capital and looking for pro-rata support. Or perhaps everyone is contemplating an inside round. Other times it is just an update because it has been a while and the business has materially changed.
There are two dynamics at play that cause these conversations to be awkward.
Jerry is the best. He has a blog post up about this talk, Being Fierce, and it’s well worth watching. Genuine and incredibly good at what he does.
Todays show, bijan and I talk about our favorite new iOS apps (timeshel, swell, fobo), the undiscovered potential in the Kinect for Windows announcement, the implications of the Uber round, & a quick recap on WWDC.
As always, please send us your feedback and suggestions for next week’s (ish) show :)
I was chatting with Jonathan Wegener, CEO of Timehop, last week. Timehop is a product that has always enjoyed almost unbelievably high retention and engagement, but previously struggled to hit hyper growth. After a ton of iteration over the last year suddenly they have started to grow quite quickly - breaking the top 50 in the US iOS Appstore, and the top 10 free overall in the UK.
Jonathan and his team have steered the product very well, so you can imagine there were a few congratulations in order. But, partly as a testament to the way Jonathan thinks, we spent a lot less time talking about how good growth is and a lot more about the right way to push going forward.
Sam Altman wrote a great piece a few days ago on founder equity. He has some excellent points around exercising options and tax treatment structure that deserve more discussion, but I want to talk about the percentage of a company that goes to non-founders.
Specifically, non-founders should be getting more equity. As Fred said, perhaps the market will slowly adjust to this. But if I were starting a company today, I would use my option pool as a competitive weapon.
The news broke today that Oculus is joining Facebook for $2 billion, and we couldn’t be happier for Palmer, Brendan, Nate, Laird and the amazing crew over at Oculus. These guys are the kind of people, and a mission, that startups are all about. As Santo wrote about, we fell for this company hard from the first moment we saw them.
There will be lots of stories about what this means for Facebook, Oculus, and the world of virtual reality but I think mostly about how this team has executed so incredibly well while carving a very unique path every step of the way.
These guys are the epitome of a missionary company trying to bring a truly amazing product to the world. That missionary nature has allowed them to ignore much of the standard startup ethos and follow their hearts in several ways that defy convention.
1. Don’t be afraid to be small - Oculus started as an ambitious hobby project, and they have fought hard to not lose those roots. A lot of startups try to look bigger than they are, but Oculus has taken a different track by just being transparent about their position.
I was sitting at The Creamery coffee shop a couple months ago with a friend, who without much segueway started raving about a local company called The Juice Shop. “Have you tried their A+ Deep Green juice? Life changing!” I was of course open to try it but their nearest location was in Cow Hollow, and so I resigned myself to likely forgetting this recommendation by the next time I was in the neighborhood.
Not to be deterred, my friend whipped out his phone and 10 minutes later a Postmate walked into the coffee shop where we sat and delivered our juices. I’ve been a regular of The Juice Shop since then.
When people talk effusively about Postmates it’s often stories like this. From the point of view of the customer this is another example of your phone as a “remote control to the physical world,” much like Uber or HotelTonight. Postmates is also often described as Kozmo, probably the most beloved of the late 90s flameout startups, only with a business model.
For a firm like Spark where we guide ourselves by the product, the strength of the experiences Postmates generates is incredibly compelling. We’ve seen the type of businesses those reactions can build. But the long term effects on the supplier side are actually just as interesting.