CNBC Squawk Box: Some thoughts on Twitter’s IPO

Silicon Valley’s Blindside & The Importance of Strategy

Shared some thoughts on Bloomberg West the other day:

Founders Fund is hiring an Associate

About Founders Fund

Founders Fund is a sector and stage agnostic venture capital firm that endeavors to identify and back the world’s most transformational technology companies. While our venture experience is deep, what truly sets us apart is that we have founded and grown our own companies. We understand why people choose to start companies — instead of pursuing the anonymous safety of working for others — and the challenges and rewards that come with such pursuit. Some of our investments include Facebook, SpaceX, Palantir Technologies, SolarCity, Spotify, Knewton, ZocDoc, Lyft, and LeapMotion. The firm has over $1 Billion in assets under management and is based in San Francisco, California.

Founders Fund is the rare organization that possesses both limited structure and robust resources. Therefore, in order to thrive on our team, one must be an entrepreneurial self-starter who proactively seeks out opportunities to add value on an ongoing basis. The investment team is small and intensively collaborative, so the candidate must also be able to work well and closely with diverse team members.

About The Role

Founders Fund is seeking an Investment Team Associate. The role will have two primary foci:

(1) Providing deal flow and due diligence support to the firm’s investment team Principals:

As one of the leading venture capital firms in the world, Founders Fund receives significant inbound deal flow. The Associate will lead preliminary screening for much of the firm’s inbound deal flow. This will include conducting market- and company-specific research, independently taking introductory meetings with entrepreneurs and determining whether Founders Fund should move the process forward, and providing due diligence support as applicable. The Associate will also be charged with ensuring Founders Fund’s inbound deal flow remains robust by proactively building relationships with a diverse range of entrepreneurs and other players in the technology ecosystem.

(2) Supporting portfolio companies on financing matters:

A number of Founders Fund portfolio companies are breakthrough science and hard technology startups that tend to be difficult for conventional venture capitalists to understand. At the same time, growth capital is critical in order for these companies to scale. The Associate will work in concert with senior investment team members to help our portfolio company founders drive successful follow-on financing rounds. Specific duties will include supporting on investor pitch deck development and refinement, and cultivating a network of trusted venture capital and private equity firms to tap for portfolio company follow on financings.

Qualifications

The Associate will have a track record of exceptional achievement, and the desire to grow with Founders Fund over a number of years. Specific qualifications should include:

• Deep knowledge of and passion for technology, as evidenced by career history and/or personal projects
• Exceptional interpersonal skills and a proven ability to foster communication and collaboration among extremely diverse individuals
• Proven ability to succeed in a flat, unstructured organizational context
• Excellent written and verbal communication skills
• Excellent analytical and quantitative skills [including mastery of excel]
• Experience with early- to mid-stage technology financing, obtained either as an entrepreneur who has successfully raised venture capital yourself, a technology-focused investment banker, or via a prior role in venture capital or related field
• Computer Science or Engineering background a strong plus [not required]
• Experience as the founder of a start-up company a strong plus [not required]

How to Apply

Email geoff@foundersfund.com with a note explaining your interest, and links to your relevant web presences that will give us a sense of who you are digitally [resume optional].

Networking Syndrome

Note: This post was originally published on TechCrunch.

This email landed in my inbox today:

Hi Geoff! I’m organizing an exclusive dinner on March 9 or 10 at SXSW for a few close friends. @Garyvee might attend and I’d love for you to join. Please RSVP by March 5.

 “Wow! I’m wanted!” I thought to myself upon receipt. But after basking in narcissistic glory for a few seconds, my pride gave way to bemusement. For one, I’ve never met the sender – we’ve exchanged a couple of LinkedIn messages, but I don’t think that qualifies me as a close friend. And on balance the @Garyvee namedrop as a hook to entice the invitee felt more sad than enticing. But most striking, to me, was that this sender is not a PR person or event planner who trades in building social connections, but rather an entrepreneur whose startup I respect. I won’t be attending the dinner, but I hope it goes great and that @Garyvee shows up (I’ve heard he is a fantastic de facto sommelier). I haven’t lost any respect for the entrepreneur who invited me, but I do have some newfound sympathy for him: He’s caught a prolific bug circulating Silicon Valley this SXSW-esque time of year: Networking Syndrome.

Ever had repeated requests to “grab coffee and catch up” from people you once had a mediocre interaction with at some random event? How about unsolicited email introductions to folks who you’re sure are super but you have no interest in meeting? Much like second hand smoke, Networking Syndrome harms even those who aren’t afflicted. Yet it’s far more harmful for the infected – namely, entrepreneurs and VCs who should spend less time networking, and more time actually, well… working. Whether it’s the entrepreneur who is organizing exclusive dinners that most likely won’t help his company while his team is back at the office, the VC who aimlessly attends confabs and grabs coffees without ever thinking deeply about the world and what types of investments she ought to proactively seek out, or the founder that cares more about dropping the name of his highest profile investor than he does about building something people actually want.

Building connections with other human beings is inherently good. The relationships I’ve built over a number of years with a handful of friends and mentors in technology have been invaluable. But they’re not transactional. Sufferers of Networking Syndrome pursue a short-term, tit-for-tat, borderline manic approach to connecting with others. Instead of building genuine, nurturing, reciprocal bridges with people they care about, networking becomes the the end in and of itself, exemplified by the rabid trading of favors in blind pursuit of more influence, more contacts, more invites, more twitter followers (btw, follow me please).

What airplanes and elementary schools are to flu transmission, events like SXSW are to Networking Syndrome. SXSW is a fantastic thing at its core – An opportunity for talented, dynamic people from all facets of the technology industry to come together in a cool city, learn from one another, listen to great music, meet new people, and have a ton of fun (shameless plug: I’m speaking at it this year – please come!). The problem is the hundreds of explicitly “Networking Event” branded get-togethers on the docket. The smart, interesting people one would actually want to network with abhor “Networking Events” and have learned to never be caught dead at one. At SXSW they’ll be giving talks, checking out Austin nightlife with friends, hosting parties, and yes, indulging in the occasional “exclusive dinner.” But they won’t be wearing smiley face name tags and balancing handshakes with flipcups of Two Buck Chuck in an overly air conditioned Radisson conference room. So the attendance of any given Networking Event is invariably comprised of the organizers, strays or newbies who don’t know any better (yet), and those with Networking Syndrome. If you accidentally stumble into a networking event, prepare yourself for stilted conversation and the self-conscious inauthenticity of lonely people speed dating through a room, desperately in search of some psychic ROI for their attendance. The problem with SXSW is that so many networking events compressed into so few days and a few blocks of downtown Austin act as an insane accelerant for the transmission of Networking Syndrome. When in Rome!

There is only one breed of individual in Silicon Valley who is immune to Networking Syndrome: The Networking Person. “Networking People” is my blanket term to describe anyone who’s primary vocation is building their network, which they either directly or indirectly monetize. There can never be too much networking for these people, because they’ve opted to orient their entire career around it. Personally, I’d rather be forcibly confined to a Teletubbie Fan Meet & Greet Mixer for a month than be a Networking Person, but unlike “Networking Syndrome”, it’s not meant as a derogatory term. As with any vocation, there are great Networking People, bad Networking People, and just plain unhinged Networking People.

Networking People know that being explicitly branded as a “Networking Person” is the kiss of death. So the smart ones ensconce themselves in occupations that allow them to monetize their network in a slightly veiled way – Be it PR, event planning, or the ever-treasured “consulting” and “advising”. And their networks fall into line: VC firms don’t talk about the fact they pay so-and-so quite a bit of money to introduce them to interesting people, and entrepreneurs don’t talk about the fact that their company was acquired by Tech Giant X in large part because that company’s CEO owed a favor to their PR person (whom Tech Giant X’s CEO may or may not have slept with). One can argue over whether it’s sad that a non-trivial portion of business in Silicon Valley gets done this way. The fact remains: It does.

Just as one must avoid those with Networking Syndrome, one must be excruciatingly careful when dealing with Networking People. Above all else, they exist to build their personal network, not yours. So to them, you’re either the product, the customer, or the supply chain. If you’re the product, congratulations – a lot of people want to meet you. The Networking Person will shower you with attention, and all you have to do is show up and eat a canapé every now and then. If you’re the customer, the Networking Person is somehow monetizing you, whether you’re explicitly paying for their services as a PR person or consultant, or in some other, more hidden manner. But being the supply chain is by far the worst. The Networking Person needs you to gain access to either the customer or product, and beyond that, you have no value to them. Being part of a networking person’s supply chain is kinda sorta like being a pipe carrying water from a reservoir to a toilet.

Yet the reason Networking People exist in Silicon Valley at all is because we need them. Many great technologists are not very social, and some are downright afraid of people. At the same time, building a relevant and supportive network is critical to scaling a startup. The best Networking People separate the wheat from the chaff and route the right people in their networks to one another at precisely the right time without asking for anything in return. They have a sixth sense about people, are always empathetic, never manipulative, and they aggressively seek out great new people to bring into their fold in a way that feels entirely un-aggressive. The best Networking People inspire tremendous loyalty, and some of them can even make a damn good bloody mary.

So if you live to network, fantastic! Become a Networking Person! The world needs them, and if you’re exceptional at networking, you’ll be well served by building your livelihood around it. But if you’re trying to build a technology startup – or invest in them – Don’t catch the Syndrome. Soullessly networking sans a concrete plan and mission will leave you feeling as empty as a fleeting one night stand. Not that there’s anything wrong with those… In fact, I hear The Driskill is a great place for them.

Slides from SXSW 2013 presentation on acquisitions

Slides from SXSW 2013 presentation on acquisitions

Presentation on Acquisitions @ SXSW – Monday March 11, 11am, Four Seasons Main Ballroom

The best startups never sell: Think Apple. Google. Facebook. Amazon. And the worst startups never sell: They die. Yet most startups won’t IPO, and most startups aren’t suicidal. Enter the acquisition. Conventional wisdom in Silicon Valley is that companies aren’t sold, they’re bought. Implicit in this narrative is that one simply cannot or should not plan for an acquisition. But the notion of not having a plan for what could be the most transformative event in your team’s life is insane. This session will serve as a step by step guide for how to develop and execute your startup’s “Terminal Plan” – selling your company on your terms – from someone who’s done it himself, and serves on the boards of companies that have been both the acquirer and the acquired. 45 min presentation followed by 15 min Q&A

Add to your SXSW Calendar by clicking here.

The “We” Pronoun

Generally, it’s a good sign when a founder describes her work and accomplishments with a bias toward the “We” pronoun as opposed to the “I” pronoun. Startups are team pursuits, and erring on the side of “We achieved X” signals recognition of that fact. Some of the most impressive entrepreneurs I know use “We” in lieu of “I” religiously, to a point where it’s almost comical…. Recently I was backstage at a conference with a founder I respect. When it came time for him (not me) to go on stage, he turned to me and said, “We’ve got to get out there now, see you later.” No, this founder doesn’t have multiple personality disorder. He has simply trained himself to think and speak in terms of “We”, by default. That’s a good thing. Indeed, now that I’m an investor, the excessive use of “I” by a founder in conversation is actually a bit of a red flag. 

 But “We” becomes problematic when used by VCs to talk about their portfolio companies. Over the hundreds of conversations with VCs I’ve had over the past few years, I’ve noticed a concerning dynamic. Oftentimes, when referring to a portfolio company that is doing well, the VC will say something like “We’re now expanding into such and such vertical” or “We’re recruiting a killer product manager from Facebook.” This is all good if the VC in question is an active board member of said company. It’s less good if the VC is a random partner, principal, or associate who happens to be employed by a fund that put money into a particular company. The optimistic view of motivations here is that the VC wants to show solidarity and kinship with the company. The more pessimistic view is that they’re trying to self-actualize on the backs of the company’s founders and team. Regardless, to my mind, the cavalier use of “We” undermines the incredibly hard work of the team. I cringe a little inside each time I hear a non-board member VC use it when referring to a company. Words do matter.

The corollary here is that when a portfolio company is not faring well, the VC will invariably utilize “They” in lieu of “We”…e.g. “They screwed up the UX” or “They aren’t growing fast enough.” How fascinating…

On a lighter note, our Founders Fund portfolio company SpaceX is absolutely killing it right now. I had absolutely nothing to do with it. I’m proud of them.

Are you building a company, or your credentials?

Note: This post was originally published on TechCrunch

Y Combinator recently announced that for their next batch, they’ll accept applications from groups and individuals without an idea. That same night, I received a breathless call from a friend currently finishing up his MBA at an elite east coast business school, asking me for help putting together his “Without Idea” Y Combinator application. This friend is smart, dynamic, and an all around great person. But he’s not someone I consider to be entrepreneurial. He was a management consultant at a big firm for years before business school, and loved it. He’s the first to admit that his interest in startups conveniently coincided with the premier of “The Social Network” a few years back. So on the call, I asked him, “why jump into entrepreneurship now. You are someone who likes to be on a stable path. Why do you suddenly want to start a startup?”

His answer: “Even if the startup ends up going nowhere, graduating from Y Combinator would be such a great credential.”

And with that, it hit me. He was far less interested in actually building a company than he was in obtaining another credential to add to his mantle. This type of credential-seeking is rampant in the world at large: For example, many go to law school for the degree, not because they want to be lawyers. Perhaps there is nothing inherently wrong with credential-seeking, but it seems like something that does not belong in Silicon Valley… Here, it’s supposed to be all about how much value you’re creating for the world, not about how much perceived value has been bestowed upon you. Yet while dropping out of college may be en vogue, it seems like these days credentials, albeit not degrees, are very much in the startup zeitgeist. Whether it’s participating in an accelerator like Y Combinator, getting a seed investment from a big name super angel or celebrity investor, or being part of the “Company X” mafia, credentials are a hot commodity. Yesterday, PandoDaily ran the post “9 Practical Tips on How to Get Into a Top Startup Accelerator” … Substitute “Top Startup Accelerator” for “Law School” and you can see how we might just be jumping the shark here.

The issue is not with the credentials themselves (I have nothing but respect for Y Combinator, and I’m grateful to the big name super angels who backed my most recent venture, Topguest). Rather, the issue is that as our ecosystem places more value on credentials, it’s only natural for entrepreneurs to pursue them more. I was as guilty of this as anyone. When I first jumped into entrepreneurship about two and a half years ago with Udorse , I put credentials first, and product a distant second. For our first few months, we focused entirely on getting into TechCrunch50 (now Disrupt) as a finalist, and raising a seed round from prestigious investors. We succeeded on both counts, but failed as a team and product. It was all my fault… In retrospect, the mistakes I made seem so obvious (e.g. have a real product you believe in before you launch on stage at the highest profile startup event in the world, etc :-). But at the time, those credentials just seemed so sexy, and I wanted them at the outset to “set us up for success.” They didn’t. The story has a very happy ending: We pivoted Udorse into Topguest and were acquired by a strategic after 18 months, but the credentials had nothing to do with it.

Part of Paul Graham’s rationale for the Y Combinator “Without Idea” track is that many YC startups already are already changing their idea during the program, so it’s is a logical evolution. I think there is a fundamental difference between going after an initial idea, then pivoting, vs. jumping into entrepreneurship with no idea at all. With the meme of “team and execution are everything”, it’s easy to forget that ideas still matter. Part of what defines a great entrepreneur is their ability to paint a vision of the future that does not exist today, and rally an incredible team around it. You simply can’t do this without an idea. It’s possible that Paul and his team will be able to identify this ability by proxy in “Without Idea” candidates, but it will be extremely hard.  In any case, Attention All Credential-Seekers: You can now brand yourself as a YC entrepreneur without even having an idea, folks… Apply away!

After a long heart-to-heart with my friend, he decided to hold off on applying to YC this cycle. I’m going to help him brainstorm ideas, and introduce him to some prospective co-founders. He just may have the right stuff to build a real company, and I’m not going to hold his MBA against him.

If you’re in it to build a successful Company, the credentials will come to you, eventually. But if you’re in it primarily for the credentials, you should consider law school.

If you like this post, please upvote it on Hacker News by clicking here.

How to score a meeting with a massive company for your startup

Note: This post was originally written for Business Insider.

At Topguest, we’ve signed many deals with very large companies such as Hilton Worldwide, IHG, Virgin America, Wyndham, and others despite being in business under a year and not having prior experience in our industry. People assume we have a massive sales force and killer connections.

In fact, we have no sales force, and certainly did not have any connections in our industry when we started last summer. Surprisingly, the question I’m asked most by other entrepreneurs is not “How do you get these deals done?” but rather “How do you even get your foot in the door?” Indeed, getting an initial meeting with the right person at a prospective partner is an arduous task for an unknown startup Through lots of trial and error, we’ve come up with a sequence at Topguest that works really well. And I’m sharing all our secrets with you.

First, before you even start trying to get a meeting, these 2 things must both be true:

  • You have a strong hypothesis of what Company X’s specific pain point is, informed by research
  • If your hypothesis is right, there is a >50% chance that your product can actually solve their pain point

If both of the above are not true, do not proceed. You will waste your time and theirs.

If both are true, you’re in luck. The sequence I propose assumes that you are starting from scratch, just like we were. No flashy connections at the target Company, no warm intro, no impressive track record. This sequence will not result in a meeting every time, but in my experience it has had about a 75% success rate:

1. CEOs, take the driver’s seat. All emails to the prospective partner should be sent by someone with a very impressive sounding title, ideally the CEO. This is annoying, since generally titles are cheesy and can be really problematic at startups. But unfortunately titles are important for business development. If nothing else, the email coming from the CEO could make BigCo Manager Y think “Oh well, even though this will likely be a waste of 30 minutes, I will get to meet the CEO of Cool Startup Z which could possibly help me somehow in the future”.  A hack for busy CEOs who don’t want to do sales: The CEO does not necessarily have to write the emails he or she sends.

2. Don’t use agencies as a crutch. Do not try to get to Company X through their advertising agency, social media consultant, hairdresser, or other service provider. Your goal is to get a meeting with a decision maker as fast as possible. Going through an Agency will put your starting point far away from a decision maker, and will 2X your timeline, at minimum. Don’t get me wrong, there are some kick-ass agencies out there doing great work, but as an unknown startup trying to get your foot in the door, an agency is not the best starting point for you.

3. Identify Prospects. An unhealthy addiction to LinkedIn is your best friend here. Use its Advanced Search function to find people at Company X that can serve as entry points for your quest. You’re looking for these characteristics:

  • Have a common thread with you that you can use as an anchor. Same college, used to work at same company, played same sport in college, were at same conference X years ago, etc. Use Google to augment their LinkedIn profile to help identify a common thread. Note, LinkedIn connections in common does not = common thread. Generally I never use weak LinkedIn connections to get an intro because a. odds are that your in-common connection does not have influence with your prospect, so you’ll just get jerked around, and b. I personally have far more respect for ambitious people that smartly reach out to me directly vs. having intermediaries I don’t know well facilitate introductions.
  • Are likely in a “Decision Making” role. Guess what? Very few jobs at big companies are actually “Decision Making” roles! It is hard to tell who can make decisions and who can’t, and even titles can be very misleading. But generally, Vice President of X, or Sr. Director of Y have at least some decision making power.
  • Work in the department who would most likely be purchasing (or testing) your product. Use your sleuthing powers to figure out what the right department is. If you have researched your market this should not be that hard.
  • Their online footprint indicates they are ambitious. Beyond LinkedIn, check Twitter, Quora, blogs, news articles, Facebook, etc. and make a judgment call on whether the person appears to be ambitious or not. Ambitious people become champions of new ideas and introduce them to organizations. Un-ambitious people do not.

4. Get email addresses for prospects. Obtain the email address of anyone you’ve identified at Company X who meets at least 2 of the 4 criteria above. Do not message prospects over LinkedIn, that’s amateur. If you can’t find the email address of a prospect, find the email address for someone else at the company and insert your prospect’s name into that format. Works every time.

5. Email only the best prospect based on the Criteria from Step 3 above, your prime prospect. Crafting this email is an art, and you must get it just right. There are many great blog posts on how to cold email people, I suggest reading them. For the purposes of this sequence, here is what I suggest:

  • The subject line must contain the single most impressive thing about your Company to Random person X. Not the most impressive thing to you or your team who know about all the goodies under the hood, but the must impressive thing to a random person from the street. If you have backing from ‘top tier’ investors or a star advisor that your prospect will have heard of, use in your subject line
  • The first sentence of the email must establish your credibility. E.g. “I am the CEO of Startup Q, recently featured in The Wall Street Journal [link]. We are building X for Y”
  • The next sentences must exploit your common thread, or subtly hint as to how you could help this person get ahead; preferably both. Here is an example: “I am also a graduate of Georgia Tech (Sci ‘08!), and am reaching out to you since our Product is delivering 200% ROI for Vaguely Competitive Company Z.”
  • The next sentences must illustrate that you get what is important to the Company and have an idea of how you could help. Here is an example: “I’m impressed by your efforts to grow Brand Z’s Facebook fan base. I read about Initiative X in AdAge and it seems like you’re at the cutting edge. That’s why I believe a simple tool that lets Company X sell products to Facebook Fans could be useful and interesting for you.
  • Close the deal with a specific request for an “introductory conversation” and suggest a few dates. End your last sentence with a question mark. After all, you’re looking for an answer.

6. Meet! If your prime prospect gets back to you within 5 business days, awesome. Prepare a brief presentation, and try your hardest to have the meeting in person. Real connections between people are developed in person not over the phone. And the hardest part of selling is a developing a real connection with the prospect.

7. Most likely, your first email attempt will not elicit a response after 5 business days. Do not despair! Rather, repeat Step 5 with each of your additional prospects.

8. Email your prime prospect with a quick follow up: Attach a new and interesting relevant news article, a statement to the effect of “I know how busy you are”, and a new meeting request with your updated availability

9. If you have one person willing to meet with you by now, awesome. Proceed with Step 6.  Most likely, you’ll still have no response. So follow up with each of the additional prospects you emailed in Step 7 with the same follow up suggested in Step 8

10. Throw your Hail Mary pass: If still no luck about 15 business days from when you started, email your initial “best” prospect and “second best” prospect together in the same email. Say something to the effect of “touched base with each of you and wanted to follow up. Do either of you have availability to connect? We have made progress X, Y, Z since my initial note and I’d love to update you.” Emailing both prospects together puts a competitive dynamic at play where neither person wants to look like a slacker to the other person, therefore making at least one of them more likely to write you back. Note: This tactic can also backfire, that’s why it’s your Hail Mary.

So that’s our secret sauce at Topguest to go from “0” to initial meeting. But the real work is in getting from initial meeting to sale or partnership. It is a process that will likely take months… Some tips on that in my next post!

 

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