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VC	  Evolu)on:	  Geeks	  Got	  Next.	      (aka	  “So(ware	  Eats	  Venture	  Capital”)	                      @DaveMcClure...
Shit	  I’m	  Gonna	  Talk	  About	                                Pro	  Tip:	  Leave	  Now	  B4	  This	  Gets	  Ugly	  •  ...
Dave McClure                        Founding Partner & Sith Lord, 500 Startups00’s & 10’s:•  Investor: Founders Fund, Face...
500 Startups: SRSLY, WTF?            Mountain View, CA – Founded 2010•  Seed Fund & Startup Accelerator   –    10,000 sq f...
Angel	  List*:	  It	  Fucking	  Rocks.	         (Use	  it,	  You	  *&#%	  Idiot)	                       •  Startups	  &	  ...
Making	  Venture	  Capital	  	       Work	  BeJer	     This	  is	  Actually	  Pre^y	  Easy,	  	       Since	  Most	  VCs	 ...
MoneyBall	  4	  Startups	                        h^p://slideshare.net/paulsingh/	  moneyball-­‐a-­‐quanRtaRve-­‐approach-­...
Startups	  #FAIL	  &	  VCs	  #SUCK.	                          But	  You	  Knew	  That	  Already	  •    Play	  Blackjack,	 ...
Bet	  on	  Singles,	  Not	  HomeRuns.	       (Look	  for	  Ichiros,	  Not	  Barry	  Bonds)	  
Early-­‐Stage	  Risk	  Reduc)on	  •    Intro:	  Crazy,	  Liars	  or	  crooks?	  Fucking	  idiots?	  •    Product:	  does	 ...
Your	  [up-­‐front]	  Diligence	  Is	  An	  Illusion	                (Real	  Diligence	  =	  Quick	  Check	  +	  3-­‐6	  m...
TIRED:	  White	  Guys	  in	  Khakis	  &	  Blue	  Shirts.	  WIRED:	  Guild	  of	  Geeks.	  Mentors.	  YC,	  500.	  
Making	  Incubators	  	    Work	  BeJer	             	   (This	  is	  Actually	  Pre^y	  HARD.)	                   Find	  ...
It	  Takes	  A	  Village	  •    Physical	  Space.	  •    People	  =	  Tribe.	  •    Mentors	  (Advise	  1st,	  Invest	  2n...
EducaRon	  &	  Community	  •    Mentors,	  Investors	  •    Design,	  Data,	  DistribuRon	  •    Pla]orm	  Partners	  •   ...
Outlier	  CompeRRon	  +	  	              Modeling	  Success	  Behaviors	  •    You	  want	  min	  3-­‐5	  “rockstars”	  to...
Product,	  Market,	  Revenue	  •  Product:	  assess	  funcRonal	  use,	  improve	  design/UX	  •  Market:	  test	  usage,	...
Hacker,	  Hustler,	  Hipster	  •  Hacker:	  engineers	  &	  developers	  •  Hipster:	  design	  &	  UX	  •  Hustler:	  mar...
Winners,	  Losers,	  Tweeners	  •  Winners	  #WIN	  (with	  or	  without	  you)	  •  Losers	  #LOSE	  (with	  or	  without...
Scaling	  VC	  •  VC	  is	  an	  immature	  &	  fragmented	  market	  •  It’s	  Ripe	  for	  DisrupRon	  •  It	  Hasn’t	  ...
Going	  InternaRonal	  •  Brazil,	  Mexico,	  India	  •  Canada,	  UK,	  Japan	  •  China,	  Indonesia,	  Russia,	  Turkey...
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VC Evolution: Geeks Got Next

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slides from my talk @ Digital October (Moscow, Sept 2012)

VC Evolution: Geeks Got Next

  1. VC  Evolu)on:  Geeks  Got  Next.   (aka  “So(ware  Eats  Venture  Capital”)   @DaveMcClure  @500Startups   @DigitalOctober  Landing  Page  Event     (Moscow,  Sept  2012)  
  2. Shit  I’m  Gonna  Talk  About   Pro  Tip:  Leave  Now  B4  This  Gets  Ugly  •  500  Startups:  Dude.  Srsly.  Like,  WTF?  •  Angel  List:  Use  It,  You  Fucking  Idiot.  •  Making  Venture  Work  BeJer  (This  is  Easy)   –  MoneyBall  4  Startups   –  Startups  #FAIL  &  VCs  #SUCK.   –  Early  Stage  InvesRng  =  Risk  ReducRon   –  Your  Diligence  Is  an  Illusion   –  Guild  of  Geeks  /  Mentor  Network  •  Making  Incubators  Work  BeJer  (This  is  Hard)   –  It  Takes  A  Village:  Mentors,  Advisors,  Investors   –  EducaRon  &  Community   –  Outlier  CompeRRon  &  Success  Behavior  Modeling   –  Product,  Market,  Revenue,  Pitch   –  Customer  AcquisiRon,  Growth  Hacking,  &  Pla]orm  DistribuRon   –  Winners  Win,  Losers  Lose,  Tweeners  Tween  •  Scaling  VC  •  Going  Intl  
  3. Dave McClure Founding Partner & Sith Lord, 500 Startups00’s & 10’s:•  Investor: Founders Fund, Facebook fbFund, 500 Startups•  Companies: Mint.com, SlideShare, Twilio, WildFire, SendGrid•  Marketing: PayPal, Simply Hired, Mint.com, O’Reilly Media•  Speaker: Lean Startup, Web 2.0, Stanford/Facebook80’s & 90’s:•  Entrepreneur: Founder/CEO Aslan Computing (acq’d)•  Developer: Windows / SQL DB consultant (Intel, MSFT)•  Engineer: Johns Hopkins‘88, BS Eng / Applied Math
  4. 500 Startups: SRSLY, WTF? Mountain View, CA – Founded 2010•  Seed Fund & Startup Accelerator –  10,000 sq ft / Silicon Valley HQ –  15 people / 8 investing partners –  Design, Distribution, Data –  US, Brazil, Mexico, India (+ more) –  600 Founders / 180+ Mentors•  375+ Portfolio Co’s / 20+ Countries –  Wildfire (acq GOOG, $350M) –  Twilio –  SendGrid –  TaskRabbit –  MakerBot –  9GAG 
  5. Angel  List*:  It  Fucking  Rocks.   (Use  it,  You  *&#%  Idiot)   •  Startups  &  Investors   •  Ac)vity  &  Metrics   •  PlaTorm  &  APIs   •  *ps  –  it’s  not  just  for  Angels,  US  
  6. Making  Venture  Capital     Work  BeJer   This  is  Actually  Pre^y  Easy,     Since  Most  VCs  /  Funds   Suck  Balls.  
  7. MoneyBall  4  Startups   h^p://slideshare.net/paulsingh/  moneyball-­‐a-­‐quanRtaRve-­‐approach-­‐to-­‐angel-­‐invesRng-­‐ausRn-­‐tx-­‐aug-­‐2012   1.  Make  Lots  Of  LiJle  Bets   2.  Count  Cards  (Monitor  Progress  &  Stats)   3.  Double  Down  on  Winners  
  8. Startups  #FAIL  &  VCs  #SUCK.   But  You  Knew  That  Already  •  Play  Blackjack,  Not  RouleJe.  (Count  Cards.  Make  Lots  of  Li^le  Bets.)  •  Don’t  Be  An  Arrogant,  Insufferable  Prick.  •  Don’t  Assume  Your  Diligence  is  4  Shit.  •  Don’t  Assume  You.  or  They  are  Smart.  •  Build  a  Fucking  Brand  That  MaJers.  •  Increase  Sample  Size.  •  Don’t  Make  Big  Bets  Too  Early.  •  Simplify  Revenue  Model.  (as  in:  HAVE  ONE,  you  fucking  idiot)  •  Bet  on  Hackers,  Hustlers,  Designers.  •  Create  a  Community.    •  Invest  afer  they  have  a  funcRonal  prototype.  •  Be  early  and  contrarian,  or  late  and  right.  •  Use  The  Tools  (you  fucking  idiot):  Twi^er,  Facebook,  Quora,  Instagram,  Pinterest,  etc  •  Talk  /  Blog  /  Present  about  something  u  know  about,  care  about.  •  Admit  Your  Faults  Frequently.  •  Laugh  a  li^le  bit.  (at  yourself,  not  others).  •  Don’t  worry  too  much  about  legal  structure.  •  Worry  a  SHIT  TON  about  valua)on.  (because  your  exits  will  be  SMALL)  
  9. Bet  on  Singles,  Not  HomeRuns.   (Look  for  Ichiros,  Not  Barry  Bonds)  
  10. Early-­‐Stage  Risk  Reduc)on  •  Intro:  Crazy,  Liars  or  crooks?  Fucking  idiots?  •  Product:  does  it  work?  (crappy,  not  perfect)  •  Market:  are  people  using  it?  (not  their  mom)  •  Revenue:  will  people  pay  for  it?  (just  a  few)  •  Growth:  how  will  it/they  scale?  •  Finance:  what  will  it  cost   –  Q1:  cost  to  get  a  customer?     –  Q2:  how  &  when  do  you  make  money?  
  11. Your  [up-­‐front]  Diligence  Is  An  Illusion   (Real  Diligence  =  Quick  Check  +  3-­‐6  mo’s)  •  You  Might  Be  Able  to  Detect  Idiots  &  Assholes.  •  You  Probably  Can’t  Figure  Out  Winners  (Yet).  •  Your  Network  is  Be^er  Than  Your  Homework.  •  Trusted  Referrals  >>  Diligence  •  FuncRonal  Prototype  >>  Team.  •  Customers/Revenue  >>  Market.  •  You’ll  Be  Wrong  4x  out  of  5x.  (If  U  Don’t  Suck).  •  In  6  Months,  You’ll  Know  If  They  Don’t  Suck.  •  In  1-­‐2  Years,  You’ll  Know  If  They’re  Awesome.  
  12. TIRED:  White  Guys  in  Khakis  &  Blue  Shirts.  WIRED:  Guild  of  Geeks.  Mentors.  YC,  500.  
  13. Making  Incubators     Work  BeJer     (This  is  Actually  Pre^y  HARD.)   Find  &  Fund  PotenRal.     Help  Them  Improve.   Educa)on  &  Community.   Access  to  Mentors.   Access  to  Investors.  If  You’re  Lucky,  Discover  [a  few]  Winners.  
  14. It  Takes  A  Village  •  Physical  Space.  •  People  =  Tribe.  •  Mentors  (Advise  1st,  Invest  2nd)  •  Events,  Foods,  Awesome.  •  This  is  YOUR  FAMILY.  Make  Them  AWESOME.  •  This  is  also  YOUR  BRAND.  So  Don’t  SUCK.  •  Make  a  Big  Tent.  (Collaborate,  don’t  Compete).  
  15. EducaRon  &  Community  •  Mentors,  Investors  •  Design,  Data,  DistribuRon  •  Pla]orm  Partners  •  Sponsors  &  Strategics  •  MarkeRng  &  Visibility  
  16. Outlier  CompeRRon  +     Modeling  Success  Behaviors  •  You  want  min  3-­‐5  “rockstars”  to  compete  •  Rockstars  to  model  success  for  others  •  You  can’t  assume  >20%  rockstars  •  Therefore,  pick  5x5  =  25  teams  •  3-­‐5  rockstar  teams  emerge,  compete,  win  •  5-­‐10  *other*  non-­‐rockstars  learn  •  Prune  losers  quickly  
  17. Product,  Market,  Revenue  •  Product:  assess  funcRonal  use,  improve  design/UX  •  Market:  test  usage,  distribuRon  channels  •  Revenue:  test  cust  acq  cost,  revenue,  *Rming*  •  Work  on  Pitch,  Help  Find  Co-­‐Investors,  etc  
  18. Hacker,  Hustler,  Hipster  •  Hacker:  engineers  &  developers  •  Hipster:  design  &  UX  •  Hustler:  markeRng  &  business  1.  Build  funcRonal  prototypes  2.  Improve  UX  so  people  convert  3.  Scale  customer  acq  &  distribuRon  
  19. Winners,  Losers,  Tweeners  •  Winners  #WIN  (with  or  without  you)  •  Losers  #LOSE  (with  or  without  you)  •  Tweeners  #TWEEN   –  They  might  win  with  your  help   –  They  might  lose  with  your  help   –  Be  helpful,  but  don’t  dally   –  Note:  you  might  be  wrong  about  the  losers  &   tweeners,  so  don’t  be  a  fucking  arrogant  asshole.  
  20. Scaling  VC  •  VC  is  an  immature  &  fragmented  market  •  It’s  Ripe  for  DisrupRon  •  It  Hasn’t  Scaled  (Yet)  
  21. Going  InternaRonal  •  Brazil,  Mexico,  India  •  Canada,  UK,  Japan  •  China,  Indonesia,  Russia,  Turkey  

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