YouSaid · the spoken record

Dave McClure

lines on the record
28
first
2016-08-15
most recent
2016-08-15
sittings or episodes
1
sources
podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

  1. “Well, let me just talk about one that is memorable for me that was fairly recent. Did it early this year? There's a company that went through the Y Carbonator program called Hometown. I guess the public facing name is called Marcor. They do custom high-end shoes. It's a founder out of Pakistan that moved to the US, and they're doing over a million dollars in revenue. They're profitable already. Part of the team is still back in Pakistan, and they produce some of the best high-end leather goods shoes. They compete with kind of Gucci and others. Shoes that cost over $1,000 or $2,000, although theirs only cost around $200 or $300. Really resourceful founder and really smart team and was our first investments in a Pakistani company, not necessarily a Pakistani founder, but a Pakistani company. I was just really impressed with what they're doing. Really great product, really great service.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “There's a bunch that I like out there. I definitely good friends with Mark Suster read his stuff all the time. He's probably one of the more thoughtful people out there. Bradfeld and Fred Wilson have been sort of mentors in our small investors in our fund and they've kind of been huge influences, I think. Brad certainly has written tremendous amounts online way in the past. Naval doesn't write quite as much as he used to and really nivi and Naval did a lot of work with venture hacks that I thought was very helpful, but that was probably more like five to ten years ago before they did Angel List. There's a lot of other great folks out there. I think one thing is maybe not to worship other blogs too much and think about writing yourself. I think there's a lot of folks who probably could start their own blogs and get a voice heard. I think it's really important to not just lean on everybody else doing that work, but even for younger folks who are getting into the”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Oh every day, every week I think about that to you. The reality is I didn't invest multiple times, not just in the seed realm, so it's probably my mistake multiple times over.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “I'll give you three guns, germs, and steel by Jared Diamonds, the Mystery of Capital. One other is a book called Spent by Jeffrey Miller The Mystery of Capital is by Hernando de Soto. That's not the explorer, but the economic minister of Peru.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “I think probably social capital, Shamath Paliopatia has made that a pretty big focus. I think Mitch and Frieda Kapoor at Kapoor Capital, they're not always considered to be BC, but they certainly do both for-profit and nonprofit investments and social impact investing. I think they're probably the leaders of a lot of that. There's obviously individuals who I think have made it a priority who come from different either ethnic backgrounds or other maybe underrepresented sort of groups that are doing great jobs.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “I think there's a bunch of geographies where we feel like there's not enough ECs or not enough capital. Right now, Southeast Asia and India are probably our two biggest priorities. But if I look at Latin America, the Arab-speaking Middle East and Africa, those three places also have huge potential, but not enough capital right now.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Both. I think definitely not enough DC capital. And we should be clear about that. In Beijing and in Silicon Valley, there is a lot of money. In most other places around the world, there isn't.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Three probably all discovered their business models relatively early and then really had dominating performances. If you look at a few others, maybe like Amazon or Facebook and PayPal, they had really strong growth, but they had some challenges in really getting the business model worked out or a lot of tougher situations. And I think people that maybe came out of some of those environments were used to stress and used to having to respond to the market by changing their product or their marketing in order to stay alive. So for whatever reason, PayPal became an interesting place where a lot of people dealt with stress from multiple sources and obviously a lot of really smart people. But it was a terrific place to meet very, very thoughtful and experienced and strong founders. And the alumni have obviously gone on to create a bunch of very recognizable company names.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Well, I think getting to work with probably watch the progress of a lot of those folks. I think Peter and Max and Reid Hoffman and a bunch of others obviously had lots and lots of success. But the lessons that we probably learned at PayPal were probably learned in the trenches with a lot of other people in the team. And those were how to build product and how to do marketing, kind of how to deal with tough situations when maybe fraudsters are trying to steal money from you or other large companies like eBay or VisaCard Associations are competing with you. And I think there was just a lot of really thoughtful and smart people there that we had to move quickly. Otherwise, we'd get our asses kicked. One of the things I do think is interesting that people don't always understand is, you know, PayPal maybe didn't have a very easy road when it was getting started. If you compare maybe a couple of companies like Microsoft or Yahoo or Google, those.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Well, I hesitate to put myself in that group because I have not created a billion dollar company, at least not yet. Well, maybe we'll see. I think, you know, I had the really good fortune to work a little bit of time with some of those folks. Initially, when I started at PayPal, Dave Sachs was my boss who went on to run Yammer, which got acquired by Microsoft for about a billion bucks. I got the chance to work pretty closely with Steve Chan and Chad Furley and Jared Karim, who were all the founders of YouTube. They were really great people. I didn't realize they were going to create the world's largest video platform, but they were great to work with.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “No, and in fact, I was going to mention we've been investors through our seed investment program in a bunch of YC companies, over 100. I think we're actually one of the top three or four investors in YC companies over the years. And same thing with TechStars. I think we've done at least 40 or 50 of the Tech Stars companies as well. So we do compete at one level, but we also invest in their companies. I would say probably a third of our overall portfolio has gone through our own program, so maybe 500 out of the 1,500 companies. Probably another 500 went through some other program. So whether that's YC or TechSars or Angelpad or Seed Camp or whatever, we've invested in plenty of other companies that have gone through both major globally recognized programs here in the US as well as other programs around the world and actually frequently for us we find companies that come from other programs around the world that may do those programs before they come to the US and do”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Offer lots of benefits and advice. In this particular case, I think they were being a little bit more selfishly directed about their advice to entrepreneurs.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Yeah, well, I did read that, and actually I responded in a blog post with what I thought. I don't think Sam said that exactly. I think what he said was people who've gone through a prior accelerator program probably have a higher bar for their performance, and that YC will have some higher level of expectation if they've, quote, been accelerated, unquote, before. I think I generally agree with the underlying premise that Sam was trying to make it was more his conclusion and recommendations afterwards that I disagreed with pretty vehemently. I think his response generally was, if you don't get into YC, just hang out and wait and keep trying. And eventually you might get into YC. And that's better than doing any other accelerator program. He didn't exactly say that either, but I think that was his implied statement. I think that's kind of laughable and actually probably really poor advice for entrepreneurs. Usually, I think Sam and YC in general is an amazing program and they”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “I think that's kind of bullshit. I mean, that really depends a lot on the program. When things were first getting started with accelerators, maybe that's the case. And I think if you have very, very accomplished entrepreneurs, perhaps those who've already had exits before or have raised venture capital before, you know, I think they have the option to certainly raise directly from BCs. I don't think you see that criticism, at least of the more established Accelerator programs. There are certainly people who say, hey, I don't need that. I've already got a network. I've already got the resources I need for help with customer acquisition and distribution or with other areas. But I think you've also seen very successful companies come back and do an accelerator program or founders who've had exits come back and do an accelerator program a second time. And I certainly think for first-time entrepreneurs, the network is really, really important. So people who get into”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “You know, I would have to say that the most important thing in making a decision to invest in the company is the company's performance. If the founders are worried about, you know, whether I'm going to follow on or not or the next round of investors are worried about whether I'm going to follow on or not, it's probably because there's not strong metrics or performance or other concerns that are going on.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “We think about it a little bit, and it does, again, matter, but I think people tend to overthink this. I think that the signaling issue, whether it happens for us or even other downstream investors, you know, well, first of all, I would say signaling is an issue when the lead investor in a prior round doesn't follow on in the next round substantially enough. And that's more likely the case for an institutional lead investor who's playing a seed or Series A role where they're on the board or they were the biggest investor in the previous round. really not a typical role for us to play. You could argue that maybe coming out of our accelerator, we might have that situation, but that's not quite the same, and we're usually not the lead investor in seed or series A rounds. But it does happen. My perspective on this is typically that if the founder or other investors are more worried about my investment decision than the baseline performance of the company, there's already likely some kind of problem there.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “If I look back on a lot of the deals that ended up becoming really big for us, you know, Twilio and Credit Karma in particular and maybe a few others, they weren't hot when we invested or they weren't so hot when we invested that we couldn't get into the round or we couldn't get into a follow-on round. So yes, it happens, but I don't know that that's a huge concern. Obviously, we don't like it when that happens. Sometimes founders, you know, we may not have a perfect relationship with founders and they may or may not always be looking out for our interests all the time. I mean, hopefully if we are doing a good job in being an investment partner with the founders, they do hopefully look out for our interests in follow-on rounds, but I don't always expect that and we have to earn that right.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Yeah, that's definitely happened. Sometimes it's larger investors who want to take as much of the next round as they possibly can. Sometimes we don't always have those rights contractually. Sometimes we may not always have capital available or we may choose not to put in money in those rounds. But more often than not, it's usually because there's demand for the round and it's oversubscribed and the participants in the round are trying to jockey for their position. I think that doesn't happen as much as maybe people might be concerned about. It does happen. The funny thing is sometimes it happens in rounds that are hot that don't end up really being that valuable. And a lot of times it doesn't happen in rounds where it's not that hot, but later it becomes valuable. I don't really think that there's as much correlation with, hey, this seed round or this A round is really hot and later that becomes Uber. That does happen every once in a while, but I would say”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Well, we can't. We don't always know that we're going to get into those rounds. A lot of the time we have to work hard to have a good relationship with the founder. Sometimes we can get that relationship contractually by signing the investment agreement asking for follow-on investment rights. We usually do that so that we can invest in at least one follow-on round with our accelerator companies. We have a kind of fixed structure that we invest into and we ask for a 500K option to invest in the follow-on round where we don't exceed 20% of the round. So typically if someone's raising a series A that might be two, three, five million dollars we would like to be able to invest up to 500K but we're not usually the lead in that scenario. But most of the times we get some ability to follow on. But you're correct, we don't always. And again, that's why we have a very large portfolio of strategies. We want to get that to happen in at least.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “We really think about 2% of our portfolio doing 50x or better and hopefully about 5% of our portfolio doing 20x or better. And then we might have another 10 to 20 percent that gets us some positive return. So that's probably going to give us a base criteria, a base outline of maybe 2 to 3x in performance. And if we're smart about the follow-on investments and the timing of our investments go as well, then we could probably steer that north of 3x and maybe up to even 4 or 5x.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Well, I think it does work for us. The typical ownership that we hold in most of our seed round investments is probably between 1 to 5 percent, maybe a little bit higher in some of the international geographies where valuations are lower. For accelerator, it might start at around 5% to 7% depending on when we invested. But most of those investments are probably never going to be higher than 10%. And in a lot of cases, they might be only around 5% or smaller. But the point that I was making with Michael is that ownership really isn't the math that we use to kind of think about how we invest. We really think more in terms of number of investments and the likely probability distribution of finding large outcomes. And then potentially we think about, you know, reserving capital for following on in our winners, but still our second check investments are probably not going to be as great an outcome as our first check. So when we think about it,”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “I don't know if that's typical, but in that case, I made a decent return, at least measured an IRR basis, that's probably around a 20% return plus or minus. But I didn't have any unicorn. Now, when we invest, we do expect to find unicorns, but we do a lot larger portfolio size. Our expectations are that we'll find those, you know, unicorns, or at least let's say 50 to 100x return profile companies, probably not more than 2% of the time. If we find unicorn only 2% of the time, or heaven forbid 1% of the time, our portfolio size needs to be a minimum of 50 to 100 to really have a shot at that. And I would argue actually we are aiming for more than one.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “Well, it certainly helps. I don't think it's required necessarily, so in my angel investment portfolio, I made about 13 investments. I did some advisory work for a few other companies, but let's say it's maybe 15 companies. There were no unicorns in that group of companies, but I had three what we would call centaurs or 100 million plus sort of exits on a relative basis, all of those companies were probably between a 10 to 20 X return on investment. And so, you know, three out of 13 or 3 out of 15 is probably a hit rate that's maybe higher than I would normally expect, but let's say that's somewhere around maybe a 20% sort of hit rate on winners. So I basically made about a million dollars, maybe a little bit more than that on 300,000. And so a 3x return or slightly more than a 3x return, the investment period return period maybe was around seven or eight years.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “No, no. Slide share and Mashery certainly were not super competitive rounds, although strong team and capable founders. Mintakam, I guess, was probably a little bit competitive, certainly by the time the A round happened, I put about 25K into the A round, but I'd already been helping the company here and there a little bit. So maybe Mint.com was kind of the hot round, but certainly, you know, when I invested, when we invested in Lyft out of FB fund, I guess it was called Zimride at the time, and when we invested in credit karma and Twilio, they were not really that competitive rounds, even though the founders were compelling most of the time. They were that particular time of time, 2008, 2009, 1010, was actually a pretty tough period of time for people to raise capital.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “I guess the three that I invested in while I was still kind of doing amateur angel investing, Mashery Slideshare and Mint, I think with both SlideShare and Mastery, I don't think either of them looked like a slam dunk win. I guess with mint.com, there was probably an expectation that this could be a really big story. And Aaron Patzer, who was the founder, CEO, was a pretty impressive founder. Even the first time that I met him, he had a product that was pretty compelling and was very confident entrepreneur. So I don't know. I mean, I still feel like most of the time when I invested companies or when we 500 invest in companies, it's very, very early and it's hard to predict what's going to happen in the future.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “500 startups off the ground in 2010, and it's kind of been crazy story ever since then, I guess, grew the company for about five people to now over 100.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “Started doing angel investing as I was leaving PayPal in 2004, kind of doing that part time recreationally, I guess. But invested in about, I guess, about 13 companies over the next four years put about 300,000, maybe total, and got a few wins out of that, I guess mint.com, Mashery, and SlideShare were kind of the bigger stories. Those were all 100 million plus exits. And I guess I figured, okay, maybe I might be able to develop a career in venture capital. So started working on that, I guess, 2008, you know, the market blew up again. So that wasn't the best time to be raising a fund. I ended up working for Founders Fund with Peter Thiel and Sean Parker for about a year and a half. I managed a little bit of capital for Founders Fund while I was running kind of an in-house angel program and also took over and ran the Facebook fund for 2009 summer. And then Christine and I got”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “I'll try not to take up the rest of this show. I graduated from Johns Hopkins in Baltimore in 88, I think, came out to California in 89, was a software developer, programmer for a few years. That kind of turned into my first startup eventually. I did some consulting, grew into a small company. I guess we started consulting in 92, did some work with Microsoft and Intel and a few others from 94 to 98 grew that to about 20 people or so. Kind of screwed up everything I could possibly about running a small business, but we still managed to get a very small exit out of that. Around 2001, I guess kind of during or after the first dot-com blow-up, I got a job working at PayPal and was there through the IPO and through the sale to eBay, and then a few years after that.”

    2016-08-15 · The Twenty Minute VC · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary For Venture Returns & Why Ownership Is Not The Math To Think About When Investing · IDENTIFIED FROM THE TRANSCRIPT · source