Tag: venture capital

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Jelly

by bijansabet

More than six years ago I joined Twitter as a user of the service.

I was immediately taken by it’s simplicity, power and how it connected us all. And it had this rare combination of being fun and important at the same time.

I was so taken with the product that I asked my friends for an introduction to the founders. The first Twitter cofounder I met was Biz. We hit it off and shortly after that I met Ev and Jack. Those founders just blew me away. Our firm led the second round and I served on their board for the next 3 years.

The founders are all still involved in Twitter in a variety of capacities. But they are also working on new things as well. Jack started Square. Ev started Medium.

And Biz started Jelly.

When Biz told me about Jelly I was inspired. The vision is powerful and important. The company & product is in so many ways a reflection of the values that Biz holds dear. I love that.

The team at Jelly is equally awesome. Ben is driving engineering along with Austin. And my friend Kevin leads the business side.

So today I’m delighted to announce that we led Jelly’s first round of capital and I’ve joined heir board of directors. Biz has the full write up about our investment along with an amazing group of individual investors — Jack Dorsey, Evan Williams, Al Gore, Reid Hoffman, Steven Johnson, Jason Goldman, Bono, Greg Yaintanes and Roya Mahboob.

I’m thrilled to have the opportunity to partner with such a talented team again. And I can’t wait for you all to see what they are building

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Picking up our own tab

by bijansabet

In the earliest days of a company the most critical things are team & product development. Founders energy needs to be primarily focused on those two things. Everything else is often a distraction.

Raising capital for startup companies also requires a big effort. Choosing the right investors that respect/support your vision, that you can imagine working with and can help isn’t an easy task even in the best of times.

And once you make this decision, the company hires lawyers and the investor hires lawyers, documents get drawn up and legal fees start building.

We would rather these startups spend less time and money in the documents and contracts and more time focused on building their business.

And we want our own actions to be consistent with this objective.

In recent years our firm and several others have taken efforts to simplify our seed and Series A legal documents. It has been a good thing and improved efficiency.

But we would like to do more to align our interests with founders.

For as long as I can recall, both as an entrepreneur and a vc, startups have been asked to pay their investors legal expenses related to their investment. Whether the company raises $500k or $5MM it has become “standard” that the company foots the investors legal bill.

I didn’t understand it then and I still don’t get it now.

Starting today we would like to change that.

My partners and I at Spark Capitalare going to pay our own legal fees at the earliest days of the company up to a cap of $25k going forward. If this cap lasts a few rounds even better. The only fine print we can think of is if there are multiple co investors we would ask them to pay their own way as well. If not than we wil just pay our pro rata.

We would rather see this money go towards better uses and continue our efforts to align ourselves with the founders that risk it all every single day.

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Some thoughts about Foursquare

by bijansabet

It’s no secret that I love Foursquare. I signed up for the service quite early and I use the product every day. I’m also a fan of the founders, the people at the company and how the product is evolving and growing. 

And I put my money where my heart is and we invested in the company a few years ago.

Earlier this morning Businessweek wrote about Foursquare – it’s challenges, it’s plans and a new round of funding.

I’m frequently asked what is the exit strategy for many of our portfolio companies. For example after our initial investment in Twitter in 2008, I have been asked in almost every interview since that time about our exit strategy, when it is going public, will they sell out, etc. This was even before the company generated revenue! 

And I’m asked that about Foursquare as well. What is their exit strategy. Do you want them to get sold one day or go public? When will they go public?

It’s hard to predict these things and I try to avoid making predictions. My objective is that our firm invests in the best people building valuable important companies. I believe Foursquare is one of those.

The Businessweek story quotes me as saying that they will go public one day. Like I said earlier, it’s hard to predict these things. I’m guessing I actually said something like “I believe they can go public one day” or “I hope they can go public one day” but perhaps I mispoke or the writer misquoted me. Regardless of the error, I’m hoping you all understand my sentiment, hope and outlook. 

I’ll bring this post home by linking to the latest Foursquare update as described on their blog here. Give it a try if you haven’t already. And I hope you love it as much as I do.

* * * 

Update: I just exchanged emails with the writer at Businessweek. It turns out I did say “I think the company will go public one day”. But the words “I think” was dropped because of space constraints for the print version of the story. It was an honest miscommunication because their editor thought “I think” was redundant. But my intention was to make it clear this wasn’t an explicit promise for the future but more of my desired outcome.

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Why Richard Price created Academia.edu

by bijansabet

I’ve been getting some nice feedback from folks that are enjoying this series of guest posts about the “why” founders create their companies. So I’m going to keep going with them. Here are earlier posts about Skillshare, Runkeeper and thePlatform)

Today, I’m going to introduce you to Richard Price who is the ceo and founder at Academia.edu. Richard’s interest and dedication to building his company is all about scratching his own itch. He built it because he wanted it to exist. I’ve really enjoyed getting to know Richard and I thoroughly believe in his cause behind the Open Sciencemovement.

Here is Richard’s own words about why he created his company.

* * *

I had the idea for Academia.edu when I was on the phone with a friend towards the end of my PhD at Oxford.

I was telling him that I needed to create a website to share the research papers I had written, and that it was a pain because I’d have to learn HTML and some design skills.

I have an ingrained response to notice when I am experiencing mental anguish about something, and to see if there is an opportunity there. It occurred to me one or two seconds after articulating the pain point that other academics probably experienced the same pain in sharing their work online.

I spent the next few evenings fleshing out the idea. It was clear to me that the site should make it really easy to create a profile and share your papers. It was also clear that you should be able to use the network to find people in similar research areas to you, and keep up with their work.

That latter discovery aspect of the idea was validated for me a couple of months later when I was giving a talk at a philosophy conference. My PhD had been on a very specific area of the philosophy of mind. I knew of 4-5 other people in the world working on the exact same problem.

There was a chair of my talk, someone who was going to introduce me. I was chatting to this person, and together we realized that we had been working in the exact same area for the last 3-4 years without being aware of each other. It was clear to me that the internet could provide a better way for academics to be aware of each other.

After finishing my PhD, I raised $600k from some London investors and moved to San Francisco. We launched Academia.edu in September 2008. In 2011 we raised a further $4.5 million from Spark Capital and True Ventures. Today over 2.5 million academics have joined Academia.edu, and over 10,000 academics join each day.

Academics use Academia.edu for three main reasons:

  • build an online presence where they can share their work
  • view analytics about how many people are reading their papers, and from which countries
  • keep up with new papers written by people they follow

There is a lot to improve on in the way that scientists communicate. Peer review is extremely slow and the process is not robust. There is an average time-lag of 12 months between submitting a paper to a journal and it being published.

There aren’t the right reputation metrics to incentivize scientists to share data-sets, code, comments on papers, and generally the full range of their scientific output. Papers generally end up behind very expensive paywalls, despite being authored and peer-reviewed for free, leading to the audience for the papers being than it might be.

Academia.edu is focused on building a new kind of reputation system in science, one that will incentivize academics to share their work openly and quickly, and to share the full range of their scientific output.

I wrote a guest post for TechCrunch a few weeks ago on the development of these new reputation metrics in science. Here is a link to that post if you are interested to read more Reputation Metrics Startups Aim to Disrupt the Scientific Journal Industry. 

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Why Ian Blaine created thePlatform

by bijansabet

Founders create companies for many different reasons. 

Last week, I shared the story about why Mike “Karnj” created Skillshare.

Today, I’m happy to share the story about why Ian Blaine created thePlatform. 

Ian’s company has a special place in my heart and in our firm’s history. It was our very first investment and also our first exit. I remember it was a competitive round and Ian was trying to decide between us (a brand new firm without a track record at Spark) and a big established well regarded firm that has been around for decades. 

I’m happy he chose us :)

The business was in the middle of the explosion of video and they built a fantastic SaaS company with meaningful network effects. I miss working with that team and I have a photograph of the founders in my office. 

Okay, without any further ado, here’s Ian’s own words about why he started thePlatform

* * *

When I started thePlatform with a small group of co-founders I had a few things on my mind. It was my second start-up. The first I started and sold very quickly during the first internet boom, only to watch it and the acquiring company crash on the rocks of the first bust. It was all fairly opportunistic and not very fulfilling, though quite a thrill ride. I learned some lessons the first time around, and I thankfully had the energy and desire to apply them in a second act.

Call it a shot at redemption. I wanted to prove to myself that I could make something that could scale and become a business – something built to last. I wanted to build a culture that took the best from the great places I had worked, but had its own personality grounded in hiring very smart, really nice people, who work well together. With that team, I wanted to make new stuff that could challenge and change a big industry.

I couldn’t boil the tipping point to starting thePlatform down to one driving force, but a confluence of the above occurring at the right time.  I think that’s a big part of why I’m still with the company after all these years. Interests and passions naturally wax and wane (at least for me) so it’s been valuable to have a diverse set of motivators that keep me engaged and energetic in my approach to my work. It doesn’t hurt that we are playing in a very dynamic, competitive market (TV/Video) that demands rapid innovation and high reliability, which makes for an interesting balancing act.

I know that my next act will be about addressing something that makes the world better. I want to take what I have learned and apply it to a problem that matters to me. It’s a natural evolution, and when the time is right, I’m excited to jump in again. 

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We are both nuts

by bijansabet

When an entrepreneur and an investor decide they want to get into business together there is magic in the air.

In the best of situations both the founder and the investor take the time to get to know each other, understand if they see the world the same way and have shared expectations about the future… and shared expectations about the uncertainty as well. They are both motivated to make it work and for the right reasons. That feeling is extraordinary.

The optimist in me says there is much more to this connection than a simple marriage of convenience where the founder needs capital and the investor has capital and is looking for talent.

Take a look at Fred’s post today. I’m writing this on my phone so can’t link but you can point your browser here.

http://www.avc.com/a_vc/2013/03/when-things-dont-work-out.html

Great post as usual.

And here’s the punchline. Most startups don’t work. The odds are against us right from the start.

So you gotta be a little crazy to start a company. And you gotta be a little crazy to invest money and time into a startup.

And that’s why we are drawn to each other.

We are both a little nuts

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Why Michael Karnjanaprakorn created Skillshare

by bijansabet

This is another installment of the “why” behind the founding of a startup.

Last week, I shared Jason Jacobs story about Runkeeper.

Today, I’m delighted to share Michael Karnjanaprakorn’s motivation in creating Skillshare.

Here’s a taste from his post from earlier today. Please read the whole thing here.

The why behind Skillshare started with a personal experience. But it lead me to asking why things were the way they were and why the world couldn’t be different. It’s a purpose that unites everyone on our team and why we come to work everyday. It’s a lifelong mission for us.

(disclosure: we are investors in Michael’s company) .

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Why Jason Jacobs started Runkeeper

by bijansabet

As a follow up to my post a few weeks back about why founders create their companies, I’m delighted to share Jason Jacobs story with you all today. 

Jason is the founder and CEO at Runkeeper and we are proud investors in his company. Jason is a tireless entrepreneur. His passion is authentic and infectious. 

Here’s Jason’s own words about his story.

* * * 

When Bijan asked me to write a blog post about what the motivation was to start RunKeeper, I thought it was timely since we are approaching the 5-year anniversary. In June of the day we were incorporated – great time to look back and reflect on the journey so far.

I had known for a long time that I wanted to be an entrepreneur. I was the little kid in my neighborhood growing up who rounded up the other kids after a snowstorm to go around shoveling people’s driveways and undercutting the price of the snow plows. I was also the kid who went to almost every small business in my hometown selling ad space in our hockey tournament program. While the extra spending money was nice, my real motivation was much more the sport of it and the feeling of accomplishment when I experienced success.

A year out of college, I joined a software company that had around 100 employees. When I left two years later, they were more than 700 employees and publicly traded. While the bubble burst and the company came crashing back down to Earth, this experience was a phenomenal learning opportunity for me and I knew then that I wanted to build enduring technology companies from small to very big for a long time to come.

From then on, I viewed all of my professional experience as ‘practice before the big game’. I had yet to come up with an idea for a business I was really passionate about, and I figured while I waited for the right idea to come along, I would continue to build up my skill set so I would be better equipped to bring the right idea to life when I found it.

It took me several years to lock in on the ‘right idea’. I hoped that whatever company I started would be one I built from small to very big over a number of years, which to me, meant it had to be an important problem that I was deeply passionate about solving in a big market. Other than building technology companies, I didn’t know what I was passionate about at the time, which made for a grueling process.

I would come up with idea after idea that seemingly met all of the criteria, but in hindsight, they were all missing the most important element – passion. I was so frustrated with the vetting process that I signed up for my first marathon as a way to stay sane as I figured out which company to go and build. It was during this marathon training that the idea for RunKeeper came to be.

With all of the innovations coming in mobile, health/fitness sensors, social networking, etc., it seemed there was a big opportunity to build a simple, social, fun digital fitness platform that tied together all of this disparate health/fitness data into a single, cohesive experience.

This was a huge breakthrough for me on multiple levels. The biggest breakthrough was that I discovered a deep passion of mine that had been with me my whole life – healthy living! I realized then that I wanted to build a big company at the intersection of fitness and technology. The funny thing is that I came to realize this as I went out on 20-mile training runs, wracking my brain along the way about what I was really passionate about. Plus, this hypothesis of a simple, social, fun fitness platform for the masses felt like a solid, well-timed starting point.

I got to work right away, and quit my job a few months later to focus full-time on building RunKeeper. Five years later, we have an awesome team of almost 40 employees, $11.5m in capital raised, over 16m users, and we are just getting warmed up!

While it was a grueling process for sure, I am very glad that I had the patience to wait until it felt right.

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Founding CEOs

by bijansabet

There is no question that I prefer to invest in startups where the founder is the CEO. 

A few years back, Ben Horowitz wrote about why startups led by the founders are best. I completely agree. At this time, every board I’m serving on has a CEO who is also a (co) founder. 

In addition to all of the many reasons Ben listed, I would also add a few. 

-founders as ceo are the best at recruiting. it’s their mission and no one can tell the story like a founder. 

-startups go through severe ups and downs. losing a big customer, losing a key employee, seeing their stock price fall or worse. lots of reasons why morale is beyond tricky in a startup. loyalty to the founder is a key thing that keeps the team together through good and rough times. 

-founders are the soul of the company. their instincts are what brought us altogether in the first place. they drive the vision. you can feel them in the products they have been dreaming about. 

There are other reasons why I prefer founder led companies.

But that actually isn’t the purpose of this post. 

This post is about why founders lose their job as CEO.

It’s often not discussed too often, if ever, so I thought I’d start about why it sometimes happens. Here are a few different scenarios:

0. Sometimes a founder doesn’t want to be CEO. I’ve been on boards in the past where the founder doesn’t want the job. The founder just wants to focus on product and wants someone else to run the company. 

1. Board members believe what works in one company must work in other companies. They try to transplant the same system into all companies. “our other young founders need an experienced coo” or “a coo is the worst idea”. See what I mean? Each startup is different and what works in one company may not be the best approach for another. 

2. Board members believe in the silver bullet. “all our problems go away if we can get a world class operator”. As bad as it sounds as I type those words, it sounds even worse to hear it in a meeting. 

3. CEO loses the confidence of the board. When the CEO makes promises and consistently doesn’t meet those promises, board confidence is at risk. The best way to deal with this is to speak openly and honestly between all members of the board with the CEO. This will help address whether the CEO is problematic or there are other issues at hand.

The worst way to deal with it is to stop making promises or to dramatically lower expectations beyond what is reasonable or useful to the company (the latter is known as putting ones own interest in front of company interest). 

4. But the absolutely hardest & most painful scenario is when the team loses confidence in the founder/ceo. The management team goes to the board and basically says, “we don’t believe anymore and can’t work for this ceo”. This becomes a very dire situation and essentially the board has to decide if they go with the team or the founder/ceo. 

It’s painful for many reasons. Often the founder/CEO doesn’t see it coming. The team hasn’t been willing or effective in getting their message across and had to trigger the nuclear option. And if the board chooses to support the team then they must protect them as well for the good of the company. 

Scenarios 1-4 are all difficult and hard. You never want to lose the founder’s leadership. That’s why early stage investors got in business with the company in the first place.

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Our new fund

by bijansabet

Late in 2004, Todd, Santo and Paul had this idea of starting a new venture capital firm. They wanted to do something entrepreneurial and build something from scratch. They asked me to join and we ended up calling the firm Spark Capital.

The premise of this new firm was to begin from a consumer perspective and invest in early stage opportunities in media, technology and entertainment.  

Over the last almost eight years, our team has expanded to include some exceptional people that are not just my colleagues but my friends. 

The truly best part is we are lucky to have the opportunity to work with extraordinary entrepreneurs who are building the things that they want to see in the world. And we want to do everything we can do to help them reach that goal because we want to see these things in the world too. 

Today, I’m delighted to announce that we have raised our fourth fund — Spark IV. Spark IV is a $450MM venture capital fund. We will remain a principally early stage firm but also have the ability to invest in category leaders as well. My partner Todd wrote down some of his observations about our new fund here and Sarah Lacy wrote about our new fund here. 

We’re excited about what is happening in technology today. More people are connected than ever. Software continues to disrupt massive industries through decreased costs, more transparency and network effects. 

We’ll continue to look for these opportunities, always starting with a consumer perspective and in search of common threads across categories including media, finance, education, healthcare, enterprise software and infrastructure. 

I am as excited about our purpose today as I was eight years ago when our earliest limited partners took a chance on us.  I’m extremely grateful for our investors who believed in us as a startup and for their continued support in our newest fund.