Disqus - Latest Comments for leehower

Re: Where Do Venture Capital Dollars Actually Come From? This Visual Explains

leehower — Mon, 07 May 2018 09:23:58 -0000

This is from my personal experience. I'm a co-founder/GP of a venture capital firm and have interacted with a wide variety of LPs including examples of all of the above.

Re: NextView Investment Themes: A Search for Authenticity

leehower — Wed, 07 Oct 2015 15:55:32 -0000

Thanks DC.

Re: Sequoia’s RIP Good Times and Their Subsequent... - The Gong Show

leehower — Wed, 15 Jul 2015 16:01:53 -0000

I think we have to distinguish between "timing" the macroeconomic environment for startups generally and "timing" the suitability of a particular startup idea. Andrew's point and the analysis here of Sequoia's investing pace/thesis through the recession of '08-09 suggests that startups that begin in "down" macro cycles can be at least as successful as the boom cycle. This is a different sort of timing than starting YouTube before broadband penetration was meaningful or starting Uber before lots of people had GPS enabled phones with always-on connections.

Re: Playing Startup

leehower — Thu, 18 Jun 2015 10:03:10 -0000

Thanks Lauren. My main point was to raise the signal flag here and start a discussion, so I appreciate the feedback here, on Twitter, etc to the post. So appreciate your question and feedback here.

My main point isn't simply about a sense of entitlement or saying everybody needs to work harder or longer hours. Based on my experience as a startup employee and entrepreneur, and based on what I'm witnessing today, I'm at times troubled by the culture which pervades some startups and some founders and employees in the ecosystem. There is a commitment level that I find lacking in this minority... which at times translates into a sense of entitlement, diminished work ethic, and all the other symptoms I noted.

FWIW I've seen this kind of attitude not just in millenials but in startup employees and founders from other generational cohorts. It's undoubtedly true millenials have a variety of different perspectives and values about work than other generational cohorts. But this isn't simply a "millenials should work harder" sentiment. It's that "playing startup" is a concern at an individual, company, and ecosystem level and one that we should all think about how to change.

Re: Playing Startup

leehower — Thu, 18 Jun 2015 09:53:56 -0000

I don't think this is a raw X hrs / week is the answer. It's a level of commitment that's engendered across the whole organization, which at times means long hours when there's critical things that need to get done. Burn out is real and there are diminishing margins to all endeavors. But it also means consistently longer than average hours if you're comparing yourself to someone who has a typical 40 hour work week.

The reality is working in a startup or being a founder means some level of sacrifice in service to one's professional goals. This is true of many career paths... being a brain surgeon or working on an oil rig in the middle of the ocean or being a starving artist.

Lastly as I said I subscribe to the notion that the goal in one's life and career should be to strive for work+life harmony. Brad Feld has talked and written far more extensively than I have on this. Harmony and balance are two different things... I don't think one has to feel guilty if there are times when the balance of effort, emotion, or time tips towards "life" than "work" or vice versa. So my point is less that you have to toil relentlessly before one can "earn" work+life harmony, but rather the goal at all points in one's career and life should be as much harmony as feasible rather than a "balance" in a raw accounting of hours.

Re: Playing Startup

leehower — Thu, 18 Jun 2015 09:45:45 -0000

Thanks Janet. Again I think it's not just long hours = commitment... there's a broader range of issues. But work ethic is definitely one.

Re: Not Every Startup Is “Killing It” (How to Speak Up During Tough Times)

leehower — Wed, 21 Jan 2015 08:58:33 -0000

Totally agree Mike. I believe net net success can teach more than failure, but indeed the best entrepreneurs and execs seek feedback of all stripes.

Re: Boston Startup Talent: Leaky Bucket or Everlasting Spring?

leehower — Mon, 21 Jul 2014 11:50:47 -0000

Thanks Scott for a well-reasoned comment here.

I wholeheartedly agree that it is important for Boston to continue producing and retaining very large standalone companies in tech/web/mobile. As you point out there are meaningful ecosystem benefits from anchor companies (employment, source of next gen of founders, angel investors, partnership magnet for smaller startups, etc). So I share your belief that this is a critical part of of the ecosystem around here, arguably one that's been most lacking in recent years and needs to be fostered. TripAdvisor remains a pillar, but unfortunately many of the companies that IPO'd in the last 5-6 years ended up getting acquired and didn't remain standalone businesses (e.g. Kayak, Acme Packet, Netezza, Bladelogic). So certainly this is something we can and need to improve upon.

To be clear I'm not saying we should throw a party because a company decides to relocate from Boston. What I am saying is that *in addition to* fostering the growth of large, enduring businesses here is that we ought to view our entrepreneurial talent pool (esp folks starting right out of college / grad school) in a different light. We can take the glass half empty approach and say any young founder who leaves means that something is wrong. But given our very unique, and constantly renewing pool of young founders or would-be founders we ought to take a glass half full approach.

Furthermore I think it's worth recognizing progress where and when it's made and not simply reiterating self-criticisms that are widely understood. The Boston startup ecosystem arguably failed Mark Zuckerberg in 2004 and he got little of the mentorship, capital, and talent he needed to build his business. I won't claim to speak for him, but my impressions is the same is not true for Eliot Buchanan in 2011... the Boston ecosystem has provided him with all of those elements as he's built his business.

Re: Entrepreneurial Success & Alchemy

leehower — Tue, 10 Jun 2014 16:08:47 -0000

Thanks. Great point that ecosystems without a deep startup scene have their own dynamic... risk taking a little less familiar, and even success probably feels less like alchemy and more a random occurance.

FWIW when I joined PayPal as an early stage startup right out of college, my parents thought I was kind of nuts and would have preferred I'd taken one of the offers from a "real" company. They kinda get it now though :)

Re: Twitter first quarter earnings meet expectations, disappoint Wall St - Fortune Tech

leehower — Wed, 30 Apr 2014 10:57:12 -0000

No disrespect to Chris Sacca, but isn't this just a classic case of an investor "talking their book"?

Re: What TAM Really Means

leehower — Fri, 14 Feb 2014 09:23:41 -0000

Typically at least a couple billion. Also growth rate matters too... a new market may be on the small size, but if it's expected to double or triple in the next decade obviously that makes a big difference.

Re: Revenue = Product Market Fit

leehower — Thu, 06 Feb 2014 15:23:06 -0000

Thanks. Your point #2 is a great one... in fact most B2B startups have to do all three. Even when substituting an existing business process or piece of software, you still typically have to support and complement other processes or software in the org.

Re: PayPal Never Could Have Been Built Lean

leehower — Thu, 06 Feb 2014 15:21:48 -0000

I think PayPal may have raised early capital (Ser A), but it's certainly true that our large $100M Ser C round would have not been possible today given the traction PayPal had at the time. We benefitted from raising that round at the peak of the internet bubble (March 2000).

I'm not sure I agree with the perspective that there's no seed/early stage capital available though. I think there's a lot of investors (large VCs, seed funds, angels) that are putting capital into unproven (e.g. pre-revenue and even pre-product) or concept stage startups. I know from our own portfolio at NextView (we focus solely on seed) of the roughly 3 dozen startups we've invested in since 2010, the vast majority were pre-revenue and over 1/3rd were concept stage (e.g. pre-product). Also I think that there's a great deal more information for founders today about the fundraising process, terms, etc than there was a decade ago (blogs, accelerators, AngelList, etc).

Re: First Mover Fallacy

leehower — Thu, 25 Jul 2013 15:59:54 -0000

Some good points here Jon. But I'd say eBay's advantage is from network effects rather than being first mover in online auctions.

In most networks or marketplaces, the benefit to all existing participants increases with the addition of more participants. While being early in auctions may have helped eBay, at the end of the day it was network effects as they added more buyers which attracted more sellers which attracted more of both. eBay initially got critical mass in collectives like beanie babies etc but then very adeptly parlayed that into many other product categories.

Same reason Facebook is successful. They were not first mover in social networking, Friender and MySpace preceded them. But as Facebook grew from a college focused network to a broader mass market SNS, new users wanted to go where all their friends were strengthening the value of the network for all.

Re: There Is No Subprime Model for VC

leehower — Thu, 25 Jul 2013 09:06:56 -0000

Very fair point about seed/early stage being riskier than late stage. But I'd make a distinction between to different forms of risk... one is the inherent risk associated with stage of investment in VC, which is why late stage investors return expectations are 3x and early stage investors are 10x+.

The second risk is broadly the quality of a potential startup relative to its peers based on team, product, competitive advantage, scope of addressable market etc. There are mediocre late stage startups just as there are mediocre early stage startups. My point is regardless of what stage a VC investor is focused on, if they try to invest in the mediocre companies at that stage at a lower valuation it usually doesn't produce attractive returns because again the exceptional companies among that cohort (early, mid, or late stage) will substantially outperform the mediocre ones.

Re: There Is No Subprime Model for VC

leehower — Thu, 25 Jul 2013 08:59:34 -0000

Thanks. I think investing in seed extensions and pivots/restarts is an interesting though perhaps weaker analogy to subprime. I'm also a little skeptical as a dedicated strategy it will work though am open minded about it.

There are obviously successful pivots & restarts like Fab, Pinterest, and even Twitter. But most pivots/restarts are failures or mediocre successes. So for it to work as an overall strategy you have to source, select, and win a disproportionate share of the winners. I'm just dubious that can be done on a repeatable basis... it's not always obvious when a company might pivot or restart and certainly hard to figure out which pivots will work and which teams are really committed to stick it out thru a gut wrenching pivot. Also sometimes there's not opportunities for new investors to come in at the time of pivot/restart. This was the case w/ Twitter when it essentially restarted out of Odeo for example and some very smart & thoughtful investors that I know and respect didn't "re-up" to stay investors in Twitter, just showing how hard it is to pick the would be winners out of a pivot/restart.

Re: The Future of Internet & Cars

leehower — Mon, 01 Jul 2013 10:30:55 -0000

Yes, parking is another interesting application. You could envision connected cars bringing a parking experience akin to what RFID and photo plate detection has done for automated tolls.

Re: Regroup Successful

leehower — Mon, 01 Jul 2013 08:44:23 -0000

Glad to hear of your regroup and thx for sharing.

Re: The Future of Internet & Cars

leehower — Tue, 25 Jun 2013 08:58:50 -0000

Thanks Charlie. Definitely translating OBD info over a smartphone or other internet connection will happen in the future and means a lot of diagnosis can start to happen remotely and/or in real-time. Obviously OEMs want to lock-in with their proprietary systems as you suggest but I don't think standardized OBD will be going away anytime soon.

Re: Should Apple Buy Hungary?

leehower — Fri, 01 Mar 2013 06:30:02 -0000

Yes, to be clear this post is kind of in jest and I understand the clear difference between turnover, cash, and acquisition multiples. GDP is an income statement "equivalent" to revenue whereas Apple's cash is obviously a balance sheet item. In reality I don't think Hungary would sell for 1x revenue.

Re: Should Apple Buy Hungary?

leehower — Thu, 28 Feb 2013 16:23:54 -0000

Indeed. This post was largely in jest obviously, but I tried to be serious about thinking through the strategic paths.

Re: Looking for Tom Brady

leehower — Mon, 07 Jan 2013 13:42:13 -0000

Yes, though unfortunately that's true for a lot of things pre-investing... you can talk w/ an entrepreneur to get a sense of ambitions but working together obviously informs you a lot more.

Re: Why Average VC Returns Don’t Really Matter

leehower — Tue, 23 Oct 2012 14:25:58 -0000

Ashish - GSV Capital has sought to create a publicly traded fund of private companies, though there are some other recent examples of private funds that employ the exact same strategy. All of these are just buying shares in very late stage startups which are available for trading on secondary exchanges like SharesPost, SecondMarket, etc. This set of companies represents a tiny sliver of the overall universe of VC-backed startups. And buyers at this stage typically have very limited return potential because of the high valuations whereas the earliest investors have far higher multiples.

To put in in perspective, the Series A investors in LinkedIn realized more than 200x return (at the time of LinkedIn's IPO in May 2011 - the stock has appreciated since then) on their initial investment. People who bought LinkedIn on secondary markets in 2010 and 2011 generally saw 1.5-3x return which is still good but a tiny fraction of the multiple for earlier investors. And late stage secondary investments are still pretty risky... just ask people who bought Groupon or Zynga at $20-30B valuations or Facebook at $100B valuations who've seen their investment lose 50-90% of it's value. So regardless of how these products are marketed, they're really very far from being an "index" of VC returns.

I have less direct experience in other asset classes to offer an informed perspective. I suspect that there are some others which have broad distribution of returns, especially in highly speculative areas like distressed assets or certain natural resource development (where you can literally strike gold). But my guess is few probably exhibit as broad a distribution as venture.

Re: Why Average VC Returns Don’t Really Matter

leehower — Tue, 23 Oct 2012 14:14:04 -0000

Indeed, an anonymized chart of distribution of returns would be more informative.

Re: Running a Startup Board Meeting

leehower — Wed, 19 Sep 2012 07:51:03 -0000

Both great points. In terms of meeting up before the meeting, I think that's useful 1-on-1 as you suggest. Doing a board dinner or something before the actual meeting I find is usually counterproductive as you end up having an incomplete discussion about the board business before the proper meeting.