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Paul Martino

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2016-11-16
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2016-11-16
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  1. “So the most recent investment in our portfolio, unfortunately, we have three or four that aren't announced yet. So the most recent public one is called Cleanify. Cleanify is a classic example of a bullpen deal. A lot of companies in the on-demand cleaning space have gone through some very hard times. It's a category that people are not excited about. But man, we got a founder over there who's just bullpen perfect. All about the numbers, great revenue growth, great traction, great go-to-market strategy, and every quarter, he's just kicking more and more butt. And you know what? It's just our favorite kind of deal because he's navigated very difficult waters. He is now going to be the breakout success in the category. And people are all going to go, I don't understand why did all those other people in this category fail. This guy clearly figured it out. And so we can't wait for the CEO of Cleanify. He's actually going to be speaking at our conference this Christmas time. And we're so excited.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Room, and you have a painful and difficult decision, and Bill's sitting in your corner helping you think it through, that is a real nice way to be able to solve a very, very hard problem at your company. And don't forget about the platitudes he taught you. You need to know that list. But the difference in the one-on-one interaction can't be understated.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Lot of times you get a CEO coach and you hear a bunch of platitudes from them. And so if you saw a guy like Bill show up to an hour talk, you know, you'd actually hear the same things. You'd hear this set of platitudes. Hey, oh, okay, Bill came in. He gave me three platitudes great. But then you get somebody like Bill to meet with you every other week to talk about your management issues and close the door and have you tell you when you're screwing up and what you're doing wrong. And now all of the platitudes go away because it's one-on-one instruction. And so it is the difference between the public version of a CEO coach, which is what you see in a little taped interview, and the private version of the person giving you the one-on-one guidance, there's no way to explain what the difference is other than to say there is no similarity whatsoever. And so I've seen entrepreneurs get turned off by CEO coaches because they think they're just full of platitudes because that's all they've ever seen. But trust me, when you're sitting in a...”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Well, that one's an easy one. That's Bill Campbell, and I've talked about this in the past. I was actually just with Randy Commissar yesterday, and Randy Commissar and Bill were absolute best friends. That's how I got to know Bill through the Holkleiner-Perkins family. Randy Commissar was on my board for several years at aggregate knowledge. He got Bill to sign on as my CEO coach for a couple years when I was there. And in many ways, I really feel like I am one of Bill's disciples now. A lot of the way that we build companies and think about the early stages of growth really come from the coach. I mean, from Bill Campbell, you know, and we lost him this year, which is really disappointing. It was very hard on a lot of us who worked with him and Randy was one of his best friends. But I really hope that I can continue the kind of work that Bill talked to me to the entrepreneurs I back. And when I tell an entrepreneur and they come in my office, I was one of Bill's last coach students and I can teach you what he taught me. Boy, you”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “His combination of social commentary politics, technology, deep learning, it is a never ending source of fantastic information. And no, it's not quite a blog or a newsletter, but anything that comes in from Otco is something I got to read.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “You know, I have to say that my favorite one is it's not even either of those. I just can't get enough of Matt Otko's posts, Matt Okko from Data Collective. I don't know if you've ever had him on this show.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “So I gotta say, I don't have a new one, but I'll tell you about the first deal in my third fund. The first deal, and I can't tell you the name yet because it's unannounced, is in the e-commerce space. We did the deal in July. And this CEO was tearing his hair out. He couldn't understand. He had great numbers. Everything was going awesome. And no one wanted to do an e-commerce deal. We did that deal in July, and the next month, Dollar Shave got bought for a billion dollars and Jet got bought for $3 billion. And everybody's knocking on our doors going, hey, you know, didn't you do that e-commerce deal? Can you introduce that to me? That is what Bullpen is all about. Going into that category, everybody hates right now and writing the check off of great metrics. And it's not frequently a month later that all of a sudden the market comes around. Usually it's a year or two later we get our dividend. But in this particular case, it was just hysterical 45 days after that closing. Those two companies get bought and everyone wants an e-commerce investment. So I got to tell you.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Well, Josh is one of the true innovators. When I said the problem with venture is that we don't have enough innovative models, we don't have enough Josh Koppelmann's in the venture ecosystem. Josh truly innovated and his, for lack of a better word, early stage option buying model, I don't know exactly the right phrase to use it. But to basically say, I'm going to let these companies fail fast and write small checks to them. It was perhaps the single most innovative thing that's happened in the venture business in the past 60 years, and he should always be appreciated for how instrumental he was in making that happen.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “It's a book from about 15 years ago called The New Thought Police by Tammy Bruce is about how groupthink can affect any kind of organization and in many ways it's the model that keeps me as contrarian as I am.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “In spite of performance that's not great. And I'm not picking on Excel here. It's just that's an example of a company Facebook was such a game changer for the Excel fund that before and after Facebook it's basically two different kinds of funds. And so the LPs need a way to be able to get away from poorly performing funds in spite of their brand, to be able to get money to the new and innovative ones so that when those new and innovative funds like first round and floodgate are now massively oversubscribed, they actually had a toe hold in them because they were able to be some of the early backers and now that those funds have maintained their small size and no one else can get in, they have allocation that no one else would have gotten. So they almost need a discovery process for new funds in the same way that venture funds have a discovery process for early stage first-time investors. And I just don't think there's enough of that in the LP community.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “So I think one of the big problems is LPs have been taught some very wrong lessons over the past few years. I meet a lot of LPs that basically say, well, Paul, you know, some of these big funds I've been in for a long time, their performance is really not good. But, you know, I don't want to be the one person who said no to the Facebook fund for Excel. And that really is one of the worst lessons that got taught. Excel's returns prior to the Facebook fund weren't the best in the industry. And so some analyst types in the LP community were like, well, you know, should I stay in Excel or not? Now think about the lesson that's taught to you. Wow, you were worried that Excel's numbers weren't looking great. And if you decided not to invest in Excel, you would have missed out on the Facebook fund. This is now trained a generation of LPs to be scared to death to cut off funds that aren't performing well because they could be just around the corner from Facebook. And as a result, a lot of that money that should be going to new and innovative funds gets captured by big funds whose brands continue to get money.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Other than I'm better in this category, I'm better in this geography than these other people. And so it's crazy to me that less than 10% of all of the newly created funds have a different strategy. I would very much like to see people innovating in the venture side in terms of the product offering that they're giving to entrepreneurs because there's just simply not enough innovation.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “On the venture side, I want to see more innovative funds. I want to see more funds structured different, focused on different things, et cetera. I don't want to see yet another fund, which is I'm a vertically oriented fund focused on security. And you know what? I'm going to be better at security than Ted Schlein at Kleiner, who's one of the best security investors. That just seems like a very hard way to go. And I'm not picking on security as a category, but I always like to use that TED example because he's so known as one of the best security investors around. So showing up as one of the 350 funds with a strategy that I know security better than TED, that seems like a very hard strategy to implement. It seems like a long-term, very difficult to defend position. Now, on the other hand, you show up with a strategy as different as bullpen or as different as correlation ventures or as different as signal fire. Wow, I want to see more of that. I want to see more of the 137 ventures out there. Of those 350 funds, I would say no more than 25 of them have a truly different.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “It's a fair question, and I wish I had a better answer. But once you get into the mechanics of how a venture fund works in terms of the way limited partners give you money, the way that you deal with taxes, et cetera, it is very difficult to innovate at all on the actual underlying mechanics. Duncan and I spent a lot of time the first year of our fund thinking about if we could actually structure the fund in a different way. And this turned out to be the double secret penalty box of raising money. When you go out and say, I'm going to invest with this contrarian untested strategy called postseed and I'm going to structure my venture fund in this completely different way. I mean, you talk about having people look at you like you're a space alien. You're a double space alien at that point. And so we quickly realized that the only way we'd be successful in raising the fund is if the funds underlying structure was very traditional with a very non-traditional strategy. I wish there was a way we could have navigated those waters, but we figured out no possible way to have a different fund structure as well.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Like, yeah, every one of them said, you know, Martino, there's one or two deals that are actually kicking butt, nobody's paying attention to. It didn't take too many of those conversations for us to realize that this contrarian orientation would lead us to superior deal flow because every one of them was dying to introduce us to one or two of those companies. But since they weren't the sexy shining object right at this quarter's demo day, no one was asking about them. But man, oh man, if you're a spreadsheet geek, you realize they had great metrics. And so there's something about the venture business being around FOMO, being around the hot category, being a tastemaker that we just really eschew and we say we're not trying to make taste, we're trying to invest in fundamentally quality companies. And so you won't read a lot of stuff on Bullpen's website about, well, the hot new markets will be blank, blank, and blank. We leave that to everybody else. Let them predict the future and let us just pick the good companies.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “It is amazing that for a group of people that fund disruption to be so oblivious to disruption happening to their own business, it has been fascinating to me to see people who fund disruption not understand that an iceberg hit this business over the last decade. And I think part of it is you're incapable of thinking about what the implications are of a disruption for your own business. And as a result, people end up being heard oriented. And my partner Duncan loves to talk about FOMO a lot. So many of the later stage investors have fear of missing out of a category or of a team or of a background. We say, well, look, what if we stop doing that? What if we said let's go look at not what the cool kids are and YC's graduating class, but let's go look at those companies that have great metrics from three classes ago that nobody's paying attention to. And you know, we sat down with some of the incubators, for example, and had this conversation before we started the funder.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “You've actually just described exactly why we figured out we would have a good business. So yes, if you were a life cycle investor, that would be the answer. But if you're a high volume option buyer, you can't do that with the volume of companies that you've invested in. This was the aha insight we had when Mike told us to go look at the data. It's about Christmas of nine, and I'm like, well, wait a minute. If you do 40 companies a year, how are you going to, without third-party validation, pick the ones that you'd give the extra money to? And it turns out many seed investors, if you ask them if they come on your show and say, hey, seed investor, do you inside bridge your companies? Almost every one of them is going to tell you categorically, no, that's something we don't do. So what in the world do you do with a company that needs that six or eight or 12 months of money, but isn't ready for the series A? So in many ways, Seed Stage investors were very happy that Bullpen came along because we solved a very fundamental portfolio construction problem for them.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Three million bucks can blow way past the milestones of a traditional Series A and go right to the supersized Series A. So we look for an entrepreneur who might be thinking about raising $5 million but with only two or three from us can go raise $15 instead at the end of our money. That's a very different picture than a, well, you know, it's kind of not working off the seed money and it's one of the reasons we don't really use that phrase second seed or seed prime or pivots. It really is a building round of a working company.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “That paints a very negative picture that I won't say is completely wrong, but I want to make sure you get the nuance of it. These are companies that are working that are up and to the right but just took a little bit longer. We have this saying at Bullpen, Bullpen never does bridges. If you need a bridge for six more months, I'm not your fund. But, you know, if it's working and it's early and you need just a little bit more time to hit your Series A milestone, I'm the person for you to go see. So paint a picture more of a company that they were hoping to be doing 200,000 in revenue. They were doing $100,000 in revenue, but their growth rate once they got the product right was faster. That's the kind of company we're looking for. So these are by no means distressed properties. We're not trying to look over the dregs and find the one diamond and the rough. We're looking for those companies that were in an out of favor category or geography that got a little bit overlooked and maybe didn't quite raise enough money. But with another two to”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “To spot a lot of things other people are just missing categories, founding teams and geographies that nobody's paying attention to because unless you aren't a spreadsheet nerd or geek or whatever word you want to deem me, if you're not looking at the spreadsheet and only looking at kind of these softer subjective, gut-oriented factors, you're going to miss Fandule. You're going to misnamely. You're going to miss Ipsy. You're going to miss some of the absolute best performing things in our portfolio because you know what? They didn't match the traditional patterns. And so I wear it as a badge of honor that I'm a spreadsheet geek when I'm looking at companies.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Yeah, well, I'm not at all insulted by that. Actually, last year at our postseed conference, we had the honor of having John Dorby one of our keynotes. And when I interviewed him, and I'm a former Kleiner Perkin CEO of aggregate knowledge, aggregate knowledge was a portfolio company of John's time. And, you know, it was funny. He basically leveled the same insult to me at my own conference in front of the whole room of people. And I really wore it as a badge of honor as opposed to a negative. Think about the positioning difference of being kind of a value-oriented seed stage investor, someone really looking at the numbers and paying attention to traction, as opposed to all of the stuff most venture people get caught up in, oh, is the founder from a sexy school? Is the category in vogue? Are they part of the Silicon Valley elite? Did they build the right prior technology at Facebook? We ignore a lot of that stuff at the front of the screen and just look at the numbers. And it allows us to do is it allows...”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “Of the post seed bucket, which is a three to five million dollar round. So there's a very clear constraint on the size of the round that can be done at postseed as well as them with the burn rate requirements are. We've done very few deals with burn rates over a 200 net as a result of the math that I've just outlined.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “We have very, very specific requirements around burn rate, revenues, et cetera. And we can go chapter and diverse. We are perhaps one of the most analytically oriented venture funds at the early stage of anyone. And so we have very specific rules. So for example, on the burn side, if we see any company that's burning over about 250, we immediately ask ourselves on a net basis, by the way, 250 on a net basis. We immediately ask ourselves if it's a fit for a postseed investment, and we do very simple math. You're burning 250 net right now. That means you're burning $3 million all in for a year, and if you need 18 months of money, that's four and a half million dollars. That's on the outside of the size of the round we'll ever want to do. But importantly, if we're going to invest in your company and your burns $250 right now, we want to invest in sales and marketing and take your burn up a little bit in the short run before it starts coming down. So if you're at 250, your burn's going to go to 400. You know, now you need a 6 or 8 million dollar round. You're outside.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “Very almost Goldilocks spot in between where you have enough money that you have runway to do what you need to do, but you don't have so much money that you can get complacent and lose your entrepreneurial edge. And so I think 24 months is about the most I'd ever advise a startup company taking in an early stage. I think 36 is too much. But you know what? 12 is probably too little now given that the depths of the crunch is as bad as it is. So, you know, you raise 18 months, you're in great shape, go to 24 if you think it's a little bit harder maybe. But, you know, if you only need 12 or 15, great. And another thing that the smart entrepreneurs are doing is some of them are figuring out that they can do it a little bit at a time. I get my first six months on a cap note and I get my next six months on another note and I get my next six months on another note and bump the cap up each time. So some really smart entrepreneurs are kind of gaining the system by rolling even their seed stage closes over time, taking a little bit more as they hit their proof points. This is a very, very interesting news.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “Well, by the way, Jeff's response is an absolutely rational response to the Series A crunch. Six or eight years ago, Jeff would have not been advising companies take 12 to 18 months of money. But with the crunch as deep as it is, with the milestones for Series A so high and the check so big for Series A, Jeff and a lot of other smart seed stage investors figured out that raising more money was a way for companies to have enough runway to avoid the crunch in certain circumstances. In my opinion, I think 36 months was almost too much money even for a seed stage endeavor. When you have that much runway, you almost get the wrong mentality as a CEO. You almost want to always have this feeling of, you know, my house is on fire and if I don't put it out fast, you know, I'm going to have to go move somewhere else because my house just burnt down. And if you have 36 months to some extent, it's like, well, you know, that side of the house is on fire. I can kind of ignore that for the next year. So there's really this kind of...”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “Bit more time and that learning and discovery phrase to use Mike Maple's words. So, what do you do if you're a CEO and you're in month 12 and you know this thing works but you're out of money in month 15 because you raised a really small seed and so the series A crunch is a really existential dilemma to keep your company going We're like man if all these big billion dollar outcomes go through this stage where they need a little bit more capital man we'd have a great business if we focused exclusively on doing that going after the series a crunch and then what we did is we deemed what we did call postseat financing because by definition this was the round after your seed but it was before the a and postseed really describes what our business model is about and and having our option available is very very important to certain kinds of entrepreneurs who have great ideas and good traction but just need a little bit more time”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “So, what it really means is the following world of option buying and fail fast, what happens when your idea you raise 12 to 18 months of money for, but you really get to your proof point in month 24. Well, you might have an awesome company. You might have a Twitter on your hands, for example. And Twitter's a good example. To some extent, that wasn't up until the right immediately. It was not a company that in the first year or two everyone thought was a grand slam home run. It's one that became one. Groupon is another example of one at the point in time. The reason I'm pointing out Twitter and Groupon is this was the data that we were analyzing in 09. Like, wait a minute, you know, Groupon started as another company called the Point, and this is a pivot off of a failed business model. And that turns out to be a billion dollar company. And so the more we looked, the more we found that the biggest outcomes of the vintage were companies that had either pivoted once or were on their second or third business model or took a little”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “Investing at every stage. And we're like, wow, these portfolio constructions are incompatible. If you're an investor, you're going to end up having a lot of companies that need a little bit more money to hit the milestone. And if you're an entrepreneur, what happens if you raise just a little bit too little money in your seed? Well, you're going to fall into a really, really big gap. And at this time, this is Christmas of 2009. There's only 25 micro funds in Christmas of 2009. By the way, there's now 350 or so seven years later. That was also part of the prediction. We said to Maples, hey, look, what are you going to do in a couple years from now when there's 100 of you funds? Well, it turned out seven years later there were 350. So it was an unbelievable Cambrian explosion of both companies and funds that happened over those seven years. And guess what? The Series A and later funds, they were consolidating through this period. You know, they had gone from 900 funds back in the bubble, 99, 2000 down to 90. So they had taken a full zero off. So you got one group going from 25 funds to 325. You got another”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “Right, right, and that's fair. And it was a very interesting transition to kind of think of your fund as a startup because it's not usually the way it's done. But, you know, Mike and Josh and a few others have done it that way. And the data that we saw was the following. The early stage investors had created a new portfolio construction versus the later stage investors. The later stage investors are what we deem lifecycle investors. They invest in every round of the company. And if you stub your toe, you go back and you get an inside round and you get some more money. But the early stage investors as pioneered by guys like Koppelman and Clavier and Maples, they really said, well, look, let's write more checks and let's kind of let the companies that aren't going to make it die faster instead of pumping more money into them. And we deem them kind of the option buying venture funds. And so you have early stage now dominated by a portfolio construction of buying an option and doubling down on a winner and late stage dominated by a business model of lifecycle and”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  30. “Starting to fund, we're thinking about how we could basically do some trading or how it would be a startup company. Mike Maples then eventually gets the last laugh. He says, Paul, I got bad news for you. The only way you're ever going to be able to take advantage of the insight about the restructuring that you have is if you go start your own fund. So I know you're turning down my job offer, but I guess I've turned you into venture person. And so I backdoored my way into it. It was not what I was trying to do as my fifth startup. But once I looked at the data and saw that this thing called the Series A crunch was absolutely going to happen, I couldn't resist putting on my entrepreneurial hat and saying, this is the thing I'm going to go after.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  31. “Adventure, you got to come hang out with me. And I was like, Mike, I'm flattered by your job offer, but I kind of have, that's not the direction I'm going with my career. He said, but Paul, look, you're a data guy. You just got to start taking a look at this data. And so he provided me some data and I knew some stuff from being involved in other funds. And I started saying to myself, wow, venture really is getting changed over the last couple years. First round capital got started in 04 and Floodgate, kind of, I guess, 07. I'm like, wow, Jeff Clavier is doing this thing over at Softech. Wow, there's like a big iceberg called early stage investing that's really changing this business. Let's go look at the data. And so I did a data analysis project inspired by Mike for about six months. And I called up my two buddies, Duncan Davidson and Rich Melman. Duncan had previously started COVAD. Rich Melman had previously started electronic arts. I said, guys, look, venture is getting disrupted right now by these early stage new models. How are we going to make money on this? And we really weren't thinking about...”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  32. “Well, I think it's a perfectly ironic or appropriate that you just interviewed Mike Maples and I just listened to the interview this morning because I would not be in this business had Mike Maples not offered me a job at his fund. So the story goes like this. It's the end of 2009. I'm stepping down as CEO of my last company Aggregate Knowledge. I've hired my replacement, a great guy named Dave Jakobowski, who's now in charge of a lot of ads over at Facebook. Mike called me up. He says, Paul, you know, you've been a good angel investor. You're the first angel in companies like Zynga and Udemy and a couple things that are really kicking. But you ever think about becoming a venture person? I said, no, Mike, I actually have no interest in becoming a venture person. I'm all set to start brainstorming what will be my fifth company. Aggregate knowledge was my fourth. And Mike said, no, no, no, Paul. You got to start paying attention to what's going on adventure. Venture's really changing a lot. I mean, I know you know this. You're one of the early limited partners in first round capital. You know there's a whole lot of different stuff going on. There's a big disruption going on.”

    2016-11-16 · The Twenty Minute VC · 20VC: Investing In Sectors That Were Cool 2 Years Ago, What Accel's Facebook Fund Taught a Generation of LPs & Why LPs Need A New Discovery Process with Paul Martino, Founding Partner @ Bullpen Capital · IDENTIFIED FROM THE TRANSCRIPT · source