welcome back to segment two of the show
we’re talking to Brad Feld now we’re
going to talk a little bit about is
there a pattern you know like is there a
certain DNA or formula or recipe for
success I personally assuming anybody
cares i always say it’s vision ambition
execution determination luck and timing
that’s not studying a lot of successful
people first I’ll do you agree with
those six ingredients am I missing one
or some of them don’t belong I can’t
remember six things in a row so there’s
too many of them okay so they all
sounded good but sound very good yeah
that’s that’s the poem it just sound
good yeah a nice word yeah examined
multiple civil okay well that’s actually
the point are there let’s start off
before assuming that there are two or
three is there a formula for successful
entrepreneurs and successful companies
in your portfolio so in my universe yes
I don’t have any idea whether it’s
statistically relevant for the whole
universe so I don’t think about it that
way but from the standpoint of the
things that we’ve been involved in there
are a couple of very clear traits that
are common the first is that we’re
investing in entrepreneurs who are
incredibly obsessed with a product so
the way we make decisions about what we
want to invest in is we focus on a set
of themes and if you’re not within a
theme which you can find at foundry
group com / themes if you’re not within
the theme we pass immediately if you’re
was in a theme these are areas we know
extremely well they’re areas that we’ve
you have you know 20 plus years of
investing opportunity and how many
things are there about a half a dozen
but they literally they evolve all the
time human-computer interaction would be
a theme the premise that the way we
interact with computers over the next 20
years will change radically protocol
companies that are built around both
real technology protocols ITF protocols
as well as ad hoc protocol so email smtp
push notifications right they don’t have
to be a standardized protocol but a
thing that comes accepted as a protocol
glue which in the 1980s would have been
called middleware and that is
essentially the
stuff that glues together machine to
machine interaction we have another
theme called adhesive which is glue in
the ad tech universe so we don’t like to
invest in ad networks and we’re not ad
tech investors but we invest in this
glue layer so those are a couple of the
examples for us once something’s in that
in one of those categories one of those
themes we go very very deep on the
people and the product and our focal
point is we want entrepreneurs who we
want to be partners with for a long time
and they want to be partners with us for
a long time so it’s both directions they
have to choose us as much as we choose
them and then we’re looking for
entrepreneurs who incredibly obsessed
about a product and in most cases it’s a
product that we have an affinity for it
doesn’t have to absolutely be a product
that we have an affinity for but they
have to have a deep affinity for it the
best of those entrepreneurs over time
make their company the product so they
start with this incredible obsession on
a product and over time scale it up as
the business gets bigger where the
company becomes it those are the two
things we’re looking for and it’s it’s
had you know incredible correlation
people who were working on something
just because they wanted to be an
entrepreneur or thought the idea was
good but weren’t obsessed about it there
are a lot of different personality
traits I think trying to segment by
personality traits has not been terribly
successfully invest in lots of
introverts a lot of extrovert spear
intrinsically motivated X kinetically
motivated a whole range of experience
along the curve technical founders
non-technical founders all have been
successful and by the way all have been
unsuccessful right so like those don’t
seem to be the balance points for us you
touched on a lot of good stuff one of
them was this notion that you want your
PO your entrepreneurs to be partners
with you for a long time what are your
thoughts on the whole sort of pivoting
failing fast recent you know yeah mantra
so I think that I think that there’s
some amazingly important things about
the notion of failing fast and pivoting
that are grotesquely misinterpreted so
the thing that’s important to recognize
is that any business is a series of
things at work and things that don’t
work and the great entrepreneurial
curves and the great startups are the
ones that when you realize something’s
not working you pivot or you kill it and
you double down on the stuff that’s
working and you continue to do that
through the life of the company so
companies aren’t these straight lines of
success of different vertical slope so
these sort of you know crazy oscillating
things where your hope is that over time
you have the success the the
misinterpretation is this notion that
you should give up that you should throw
it away there are cases where you should
call it quits oh you know I’ve had the
conversation with a number of
entrepreneurs who went on to have an
amazing next experience when they held
on to this thing that just wasn’t
working and you say look just just let
go like this one didn’t work and the
entrepreneurs who go through a success
curve and a failure curve or the ones
that are the most fun to work with
because they know what they both taste
like and so they’re able to sort of
understand that in their brain versus
the ones who’ve i’ve only ever been
successful you know and you’re in this
denial about what’s actually really
going on or then the other side of it
which is the ones who have not tasted
success that’s okay too is just harder
because then you’re sort of in this
cycle especially if you had two or three
things that haven’t worked where you’re
struggling to see what that success
curve really is how much of your job is
that like almost being a cheerleader /
psychologist with the entrepreneur or is
that something that you or other
investors sort of shy away from because
you don’t want to be yeah I actually
don’t know about other investors nor do
I really care so I think I sort of good
from the standpoint of what what my
three partners yeah well my three
partners I our guys say Brad’s universe
boundaries University what we’re good at
and what we what are our values I think
an enormous amount of what we do is be
intellectual and emotional support for
the entrepreneurs and for the CEOs of
the companies who oftentimes are the
same as the entrepreneurs that it’s both
intellectual and emotional like we can
provide lots of knowledge and experience
and lots of you know from my experience
I did this or I think you should think
about this way but an awful lot of that
is just emotional to write being a CEO
of a company is really lonely and it’s
especially lonely when things aren’t
going the way you want them to go or
when you haven’t had the experience Rand
Fishkin from SEO Moz you know wrote a
great blog I saw today
blog about essentially slowing down to
speed up and sort of the dislocation
that happens after you raise a big
financing after you’ve had a company
that hasn’t had a lot of money and you
see this I’ve seen this over and over
again you have a period of six months
where it feels like you’re stuck in
molasses and you’re not you’re just
doing things that aren’t externally
visible and you’re building a foundation
to be able to really accelerate the
business and sometimes that doesn’t work
but most of the time it does but the
entrepreneur is used to this continual
improvement on a shoestring all of a
sudden thinks well I have all this money
everything should be awesome and in fact
you go through this sort of cycle where
you question do we suck now we don’t
know how to get these things out you
know we’re slow your customers start
saying hey used to release something
once a week and it’s been two months
what’s going on and figuring out all
that stuff I mean we have we’ve seen it
over and over again so i don’t have to
say it’s okay don’t worry let me give
you a hug i mean i can do that but you
can also provide real substance around
well this is what you’re going through
and this is how i would encourage you to
think about it and here’s some people to
talk to and that’s very emotional versus
just purely intellectual yeah the
analogy I use is if you’re wandering in
the desert with no water and also then
they throw you in the pool that’s going
to mess up your oh yeah yeah you totally
screwed went through that I thousand
eleven l’s like father’s okay so I had a
question that was what’s the biggest
mistake investors make but I won’t ask
you that I’m gonna ask you what’s the
biggest mistake you make or you’ve made
and what you want i would say i would
say there’s there’s two mistakes when i
look back in history that i’ve made one
mistake which i believe i don’t make
very often anymore is not confronting
reality as quickly as it appears so
there are lots of cases where you see a
path and you can predict that the path
is going to go somewhere and you don’t
confront the reality of it now there are
cases where you decide to let the path
play out because the entrepreneur needs
to learn it for himself but there’s a
way to do that while still confronting
it and you know an examples you know
example would be the company that has a
fantasy expectation of what they’re
going to sell and you know they build
their cost structure associated with
that fantasy expectation what they’re
gonna sell it doesn’t mean that the
entrepreneurs are bad or the company is
bad you just you know that’s going to be
at a calibration and I used to I used to
not be as tuned into the best way to
deliver that
ice and in some cases sort of you know
hope well I hope it’ll be okay versus
saying I think this is what’s going to
happen it’s your call whether you want
to execute this way or not but here’s
here’s the cutoff points that I’d
encourage you to put in place got a lot
better at that Prop number two is I when
I started making investments in the
first 40 angel investments i made it was
all about people and product that was it
as an investor I was just totally
focused on people in product if it was
if I had I want to be your partner and I
think what you’re doing is awesome and I
think you think what you’re doing is
awesome let’s go I then went through a
period of time when I was at mobius
venture capital so 1997 to about two
thousand and three ish where there are a
whole bunch of other things that crept
into the analysis is the market size big
enough is a management team strong
enough what’s the competitive dynamics
and when I look at how we invest today
we’re totally focused on people in
product again and the biggest mistake
that I made as an investor was losing
that focal point losing the notion that
you know if I knew you know what’s what
why does it matter what the total
available market is just pick a big
market and if you can’t define what
you’re doing is a big market why are you
doing it and you certainly won’t be
obsessed about something if the
opportunity space isn’t big right so
there’s some things that you can do to
solve for that is a management team and
the company when we thought when we
invest in it going to be right of course
not but part of what we can do is help
make the management team awesome okay so
I don’t want a segue into Zynga to
assume or you know project that Zynga
was a mistake thing I think it was an
unbelievable company when most investors
put in their money but clearly after the
IPO something is off the rails like
either the trains getting off the
station off the rails or somebody is
some things are happening that they
don’t that they did not expect so my you
could talk as much or as little about
Zynga in particular but Zynga and I
would say almost all of the social IPOs
apart from LinkedIn make me wonder if
the criticism that VCS are more
concerned with just flipping a company
and saying that some other sucker
investors you know problem is valid do
you think that investors are interested
in building companies that scale and
last or is it just companies that scale
fast and then they
sort of get liquidity well I think a
venture capital investor and firm firms
from firm to firm will have different
strategies and sort of different views
on what they do at foundry we view
ourselves as early stage investors were
not apologetic about it we view that
what we’re doing is helping create a
company our belief is that the great
entrepreneurs are ones who are trying to
create a company that is enduring for
very long period of time and we view our
role as helping and supporting the
growth and development of that company
up to one of two points the point at
which somebody acquires the company well
one of three points I guess the point
which Scully fails a point at which
somebody acquires the company or the
point in which a company goes public a
point what your company goes public is
just another step along the company’s
way but for the company for the way we
invest in the time frame that we invest
the IPO is a transition point for us
from one stage of a business life to
another and that transition point
doesn’t happen on the day of pricing
that transition point happens the day
that the company decides to file i was
on a bunch of public company boards in
2000-2001 time frame and i realized a
lot of things one is wasn’t very
satisfying experienced and I didn’t
enjoy the work the second is I really
had well I had strong emotional support
for the entrepreneur and for the
business that was being created it
didn’t it naturally map to how I wanted
to spend my time and the constraints of
being on the board of a public company
changed all of those dynamics so I think
our view as an investor is we’re happy
to support the company over with the
idea of a very long-term build an
example that I would give you that would
be a coming like return path which we’ve
been involved in for a dozen years you
know we’re not you know we plenty of
chances to sell the company but
entrepreneur Matt Bloomberg who’s the
CEO is awesome CEO is building a really
significant company he wants to run that
company for a long time that’s great he
wants to take the company public and
continue to run it that’s great it was
not logical from my frame of reference
in terms of our goal to carry on I would
also add that I have absolutely no
understanding of public market
I have no desire to understand it it’s
not something I do I don’t own any
public company stocks other than the
stocks that I own from companies that
I’ve been involved in have gone public
or companies that I have money with
asset managers who have public company
stock so you know what they are so my
view is I don’t have any way to analyze
the relative value in the public markets
and you know my view is my view that the
current values are right or wrong I
don’t know what I do know about
companies like like Zynga is I look at
that company i remember it was 10 people
only invested it’s 3,000 people today it
was you know a hundred thousand dollars
a month or even less when we invested
and it’s you know a billion dollars plus
a year today you know that’s a pretty
extraordinary cycle and you know to
understand what it’s going to look like
in 20 years I don’t know and you know
you can go back in time and calibrate
based in time right there’s a moment in
time where Amazon was worth almost
nothing and everybody said amazon is
going to go out of business there was a
time people forget that Oracle was
almost out of business and you know
Oracle’s one of those valuable coming to
what there was a time when Apple was
worth yeah very little more than had
cash and so the dynamics of what how the
public market views things it’s just a
relatively short cycle on a long-term
arc okay good stuff we’re going to take
a short break come back in the final
segment we’re going to do lightning
round we’ll be right back
we’re talking to Brad Feld now we’re
going to talk a little bit about is
there a pattern you know like is there a
certain DNA or formula or recipe for
success I personally assuming anybody
cares i always say it’s vision ambition
execution determination luck and timing
that’s not studying a lot of successful
people first I’ll do you agree with
those six ingredients am I missing one
or some of them don’t belong I can’t
remember six things in a row so there’s
too many of them okay so they all
sounded good but sound very good yeah
that’s that’s the poem it just sound
good yeah a nice word yeah examined
multiple civil okay well that’s actually
the point are there let’s start off
before assuming that there are two or
three is there a formula for successful
entrepreneurs and successful companies
in your portfolio so in my universe yes
I don’t have any idea whether it’s
statistically relevant for the whole
universe so I don’t think about it that
way but from the standpoint of the
things that we’ve been involved in there
are a couple of very clear traits that
are common the first is that we’re
investing in entrepreneurs who are
incredibly obsessed with a product so
the way we make decisions about what we
want to invest in is we focus on a set
of themes and if you’re not within a
theme which you can find at foundry
group com / themes if you’re not within
the theme we pass immediately if you’re
was in a theme these are areas we know
extremely well they’re areas that we’ve
you have you know 20 plus years of
investing opportunity and how many
things are there about a half a dozen
but they literally they evolve all the
time human-computer interaction would be
a theme the premise that the way we
interact with computers over the next 20
years will change radically protocol
companies that are built around both
real technology protocols ITF protocols
as well as ad hoc protocol so email smtp
push notifications right they don’t have
to be a standardized protocol but a
thing that comes accepted as a protocol
glue which in the 1980s would have been
called middleware and that is
essentially the
stuff that glues together machine to
machine interaction we have another
theme called adhesive which is glue in
the ad tech universe so we don’t like to
invest in ad networks and we’re not ad
tech investors but we invest in this
glue layer so those are a couple of the
examples for us once something’s in that
in one of those categories one of those
themes we go very very deep on the
people and the product and our focal
point is we want entrepreneurs who we
want to be partners with for a long time
and they want to be partners with us for
a long time so it’s both directions they
have to choose us as much as we choose
them and then we’re looking for
entrepreneurs who incredibly obsessed
about a product and in most cases it’s a
product that we have an affinity for it
doesn’t have to absolutely be a product
that we have an affinity for but they
have to have a deep affinity for it the
best of those entrepreneurs over time
make their company the product so they
start with this incredible obsession on
a product and over time scale it up as
the business gets bigger where the
company becomes it those are the two
things we’re looking for and it’s it’s
had you know incredible correlation
people who were working on something
just because they wanted to be an
entrepreneur or thought the idea was
good but weren’t obsessed about it there
are a lot of different personality
traits I think trying to segment by
personality traits has not been terribly
successfully invest in lots of
introverts a lot of extrovert spear
intrinsically motivated X kinetically
motivated a whole range of experience
along the curve technical founders
non-technical founders all have been
successful and by the way all have been
unsuccessful right so like those don’t
seem to be the balance points for us you
touched on a lot of good stuff one of
them was this notion that you want your
PO your entrepreneurs to be partners
with you for a long time what are your
thoughts on the whole sort of pivoting
failing fast recent you know yeah mantra
so I think that I think that there’s
some amazingly important things about
the notion of failing fast and pivoting
that are grotesquely misinterpreted so
the thing that’s important to recognize
is that any business is a series of
things at work and things that don’t
work and the great entrepreneurial
curves and the great startups are the
ones that when you realize something’s
not working you pivot or you kill it and
you double down on the stuff that’s
working and you continue to do that
through the life of the company so
companies aren’t these straight lines of
success of different vertical slope so
these sort of you know crazy oscillating
things where your hope is that over time
you have the success the the
misinterpretation is this notion that
you should give up that you should throw
it away there are cases where you should
call it quits oh you know I’ve had the
conversation with a number of
entrepreneurs who went on to have an
amazing next experience when they held
on to this thing that just wasn’t
working and you say look just just let
go like this one didn’t work and the
entrepreneurs who go through a success
curve and a failure curve or the ones
that are the most fun to work with
because they know what they both taste
like and so they’re able to sort of
understand that in their brain versus
the ones who’ve i’ve only ever been
successful you know and you’re in this
denial about what’s actually really
going on or then the other side of it
which is the ones who have not tasted
success that’s okay too is just harder
because then you’re sort of in this
cycle especially if you had two or three
things that haven’t worked where you’re
struggling to see what that success
curve really is how much of your job is
that like almost being a cheerleader /
psychologist with the entrepreneur or is
that something that you or other
investors sort of shy away from because
you don’t want to be yeah I actually
don’t know about other investors nor do
I really care so I think I sort of good
from the standpoint of what what my
three partners yeah well my three
partners I our guys say Brad’s universe
boundaries University what we’re good at
and what we what are our values I think
an enormous amount of what we do is be
intellectual and emotional support for
the entrepreneurs and for the CEOs of
the companies who oftentimes are the
same as the entrepreneurs that it’s both
intellectual and emotional like we can
provide lots of knowledge and experience
and lots of you know from my experience
I did this or I think you should think
about this way but an awful lot of that
is just emotional to write being a CEO
of a company is really lonely and it’s
especially lonely when things aren’t
going the way you want them to go or
when you haven’t had the experience Rand
Fishkin from SEO Moz you know wrote a
great blog I saw today
blog about essentially slowing down to
speed up and sort of the dislocation
that happens after you raise a big
financing after you’ve had a company
that hasn’t had a lot of money and you
see this I’ve seen this over and over
again you have a period of six months
where it feels like you’re stuck in
molasses and you’re not you’re just
doing things that aren’t externally
visible and you’re building a foundation
to be able to really accelerate the
business and sometimes that doesn’t work
but most of the time it does but the
entrepreneur is used to this continual
improvement on a shoestring all of a
sudden thinks well I have all this money
everything should be awesome and in fact
you go through this sort of cycle where
you question do we suck now we don’t
know how to get these things out you
know we’re slow your customers start
saying hey used to release something
once a week and it’s been two months
what’s going on and figuring out all
that stuff I mean we have we’ve seen it
over and over again so i don’t have to
say it’s okay don’t worry let me give
you a hug i mean i can do that but you
can also provide real substance around
well this is what you’re going through
and this is how i would encourage you to
think about it and here’s some people to
talk to and that’s very emotional versus
just purely intellectual yeah the
analogy I use is if you’re wandering in
the desert with no water and also then
they throw you in the pool that’s going
to mess up your oh yeah yeah you totally
screwed went through that I thousand
eleven l’s like father’s okay so I had a
question that was what’s the biggest
mistake investors make but I won’t ask
you that I’m gonna ask you what’s the
biggest mistake you make or you’ve made
and what you want i would say i would
say there’s there’s two mistakes when i
look back in history that i’ve made one
mistake which i believe i don’t make
very often anymore is not confronting
reality as quickly as it appears so
there are lots of cases where you see a
path and you can predict that the path
is going to go somewhere and you don’t
confront the reality of it now there are
cases where you decide to let the path
play out because the entrepreneur needs
to learn it for himself but there’s a
way to do that while still confronting
it and you know an examples you know
example would be the company that has a
fantasy expectation of what they’re
going to sell and you know they build
their cost structure associated with
that fantasy expectation what they’re
gonna sell it doesn’t mean that the
entrepreneurs are bad or the company is
bad you just you know that’s going to be
at a calibration and I used to I used to
not be as tuned into the best way to
deliver that
ice and in some cases sort of you know
hope well I hope it’ll be okay versus
saying I think this is what’s going to
happen it’s your call whether you want
to execute this way or not but here’s
here’s the cutoff points that I’d
encourage you to put in place got a lot
better at that Prop number two is I when
I started making investments in the
first 40 angel investments i made it was
all about people and product that was it
as an investor I was just totally
focused on people in product if it was
if I had I want to be your partner and I
think what you’re doing is awesome and I
think you think what you’re doing is
awesome let’s go I then went through a
period of time when I was at mobius
venture capital so 1997 to about two
thousand and three ish where there are a
whole bunch of other things that crept
into the analysis is the market size big
enough is a management team strong
enough what’s the competitive dynamics
and when I look at how we invest today
we’re totally focused on people in
product again and the biggest mistake
that I made as an investor was losing
that focal point losing the notion that
you know if I knew you know what’s what
why does it matter what the total
available market is just pick a big
market and if you can’t define what
you’re doing is a big market why are you
doing it and you certainly won’t be
obsessed about something if the
opportunity space isn’t big right so
there’s some things that you can do to
solve for that is a management team and
the company when we thought when we
invest in it going to be right of course
not but part of what we can do is help
make the management team awesome okay so
I don’t want a segue into Zynga to
assume or you know project that Zynga
was a mistake thing I think it was an
unbelievable company when most investors
put in their money but clearly after the
IPO something is off the rails like
either the trains getting off the
station off the rails or somebody is
some things are happening that they
don’t that they did not expect so my you
could talk as much or as little about
Zynga in particular but Zynga and I
would say almost all of the social IPOs
apart from LinkedIn make me wonder if
the criticism that VCS are more
concerned with just flipping a company
and saying that some other sucker
investors you know problem is valid do
you think that investors are interested
in building companies that scale and
last or is it just companies that scale
fast and then they
sort of get liquidity well I think a
venture capital investor and firm firms
from firm to firm will have different
strategies and sort of different views
on what they do at foundry we view
ourselves as early stage investors were
not apologetic about it we view that
what we’re doing is helping create a
company our belief is that the great
entrepreneurs are ones who are trying to
create a company that is enduring for
very long period of time and we view our
role as helping and supporting the
growth and development of that company
up to one of two points the point at
which somebody acquires the company well
one of three points I guess the point
which Scully fails a point at which
somebody acquires the company or the
point in which a company goes public a
point what your company goes public is
just another step along the company’s
way but for the company for the way we
invest in the time frame that we invest
the IPO is a transition point for us
from one stage of a business life to
another and that transition point
doesn’t happen on the day of pricing
that transition point happens the day
that the company decides to file i was
on a bunch of public company boards in
2000-2001 time frame and i realized a
lot of things one is wasn’t very
satisfying experienced and I didn’t
enjoy the work the second is I really
had well I had strong emotional support
for the entrepreneur and for the
business that was being created it
didn’t it naturally map to how I wanted
to spend my time and the constraints of
being on the board of a public company
changed all of those dynamics so I think
our view as an investor is we’re happy
to support the company over with the
idea of a very long-term build an
example that I would give you that would
be a coming like return path which we’ve
been involved in for a dozen years you
know we’re not you know we plenty of
chances to sell the company but
entrepreneur Matt Bloomberg who’s the
CEO is awesome CEO is building a really
significant company he wants to run that
company for a long time that’s great he
wants to take the company public and
continue to run it that’s great it was
not logical from my frame of reference
in terms of our goal to carry on I would
also add that I have absolutely no
understanding of public market
I have no desire to understand it it’s
not something I do I don’t own any
public company stocks other than the
stocks that I own from companies that
I’ve been involved in have gone public
or companies that I have money with
asset managers who have public company
stock so you know what they are so my
view is I don’t have any way to analyze
the relative value in the public markets
and you know my view is my view that the
current values are right or wrong I
don’t know what I do know about
companies like like Zynga is I look at
that company i remember it was 10 people
only invested it’s 3,000 people today it
was you know a hundred thousand dollars
a month or even less when we invested
and it’s you know a billion dollars plus
a year today you know that’s a pretty
extraordinary cycle and you know to
understand what it’s going to look like
in 20 years I don’t know and you know
you can go back in time and calibrate
based in time right there’s a moment in
time where Amazon was worth almost
nothing and everybody said amazon is
going to go out of business there was a
time people forget that Oracle was
almost out of business and you know
Oracle’s one of those valuable coming to
what there was a time when Apple was
worth yeah very little more than had
cash and so the dynamics of what how the
public market views things it’s just a
relatively short cycle on a long-term
arc okay good stuff we’re going to take
a short break come back in the final
segment we’re going to do lightning
round we’ll be right back
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