Archive for October, 2012
October 19, 2012
Over the course the late morning & early afternoon I spent back-to-back hours with Fred Wilson and Alan Patricof. Fred, of course, is almost without question the most successful and impactful venture investor on the east coast (and perhaps the country) over the course of the past 10 years. And Alan is no less than the father of the venture business in New York City and a major player in the national venture scene almost since its beginning, having founded two great and enduring firms.
Alan has been a valued mentor of mine for several years now. Fred I don’t know very well, but I sure enjoyed the opportunity to get to know him better.
It was pure coincidence that these meetings ended up scheduled back-to-back; and taken separately, I wouldn’t have thought much about the significance of the conversations. But as a pair, the 2.5 hour chunk of my day they created left me pondering the importance of what each of these guys was doing in those discussions.
Each meeting was, pure and simple, a pay it forward type conversation where Alan and Fred were offering me advice and perspective on building a great venture firm.
Neither of these guys owe me anything, and I have no delusions about my standing in the world – certainly a meeting with Brad Svrluga is not something many people, let along these guys, take out of some sense of obligation.
But both of these guys just get it. They understand how the game is played. They remember the people that gave them formative advice at critical points in their careers. And now they’re taking their turn and paying it forward.
It’s a remarkable gift to me, and a great example that we should all follow. The lesson of these meetings extends into any profession, but I think it is critically important in the entrepreneurial ecosystem.
This ecosystem is so important, it represents such critical potential for our economy, it is so tightly knit and interdependent, and it is comprised of such fragile individual pieces. Our leaders, and everyone, paying it forward and supporting the ecosystem is an essential component of its continued growth and development.
It makes a difference, and I believe is a responsibility of citizens of the tech community at whatever level in their careers. It is no less important for a talented junior software developer to mentor the newest young hacker as they enter the community than it is for the Deans of the VC community to look out for the leader of a smaller, younger firm.
And it’s not purely altruistic. Doing this work will genuinely impact the ‘giver,’ exposing him to new ideas, fresh perspectives, and a heightened awareness of what’s going on throughout the ecosystem. Not to mention that it helps to ensure that the next generation of leaders is on your side.
Too many entrepreneurs live in a ramen and pizza-fueled cave, focusing exclusively on the things that directly and immediately advance the cause of their business. But without exception, all of the best entrepreneurs I’ve worked with have, like Fred and Alan, taken the long view in staying connected to their communities and being generous in contributing to a rising cohort of young leaders.
We do a pretty good job of this in the tech community, but we can do so much better. Everyone has a role in contributing to raising the tide that will float all our boats. What are you doing?
P.S. Speaking of paying it forward, you should definitely have a work at the exciting and massively important work that Fred is doing with AFSE, the Academy For Software Engineering. Was so great to learn more about it. Thanks, Fred!
October 1, 2012
The exercise of articulating an investment thesis, as simple as it sounds, is a critical element of how we work. Starting to work on it early in the process of evaluating a company can be enormously productive in helping to focus our work on the most critical issues. And you’d be surprised by how many things seem exciting at first or second glance, but then fall apart when it comes to actually trying to construct a cogent thesis. If you’re interested in an opportunity but can’t crisply articulate why it might be important, there’s frequently a good reason for that.
We write these things down, share them internally, debate them actively, and refer back to them regularly. And every once in awhile, you make an investment and a thesis plays itself out more or less exactly how you imagined it would. Our investment in Savored, and Savored’s ultimate sale last week to Groupon, is a great example.
Here’s my original investment thesis for what was then called VillageVines, as I shared it with my partners in late 2010:
- Consumers have been thoroughly trained in concepts like daily deals, discount travel sites, etc.
- The restaurant business has a decades-long history of experimenting with online and offline deal and promotion companies, all of which were complex & inelegant in their implementation and user experience.
- Groupon, et al have opened eyes to restaurateurs re: a massive marketing opportunity, but failed to deliver a solution that works for their businesses. VillageVines model is consistent with my belief that there are opportunities to offer deeper, more consistent relationships for restaurants/retailers/service providers.
- Restaurants desire a steady channel through which they can move their daily quantity of perishable inventory – VV is a model with which restaurants build deep, lasting relationships (and even dependency on), and which they can control and tweak to suit their own needs.
- The user experience is clean, simple, and discrete, making it a more compelling value proposition for consumers.
- While not yet implemented, model will be brilliantly suited to spontaneous, mobile usage – should be a major growth opportunity
- This is truly a virtuous, everybody wins model – early restaurants report absolutely loving the service
- Viral growth to date in NYC has been very strong, despite only negligible marketing. The model is inherently well suited to a high degree of virality.
- Super-talented, energetic, highly analytic young founding team who will run through walls to make this win.
In this case, amazingly, it turns out that stuff all more or less proved out. Anti-Groupon vitriol grew steadily in the fine dining world, and Savored became viewed as something of a heroic antidote, leading to rapid growth of the restaurant partner community. The diner user experience got better and better and consumers loved it. Many restaurants became addicted to Savored’s ability to fill their tables.
Sometimes, as with Savored, a team is right enough that the business they set out to beat through competition becomes the logical place to end their entrepreneurial journey. In many ways, that’s as powerful a form of validation as you can find. At the same time, it tends to be particularly bittersweet.
And so it is with Savored. Ben and Dan set out to build for restaurants a genuine yield management solution that would be the perfect antidote to the unrealized promises of Groupon, LivingSocial, and others. Two years later, they’ve succeeded. And guess what…people noticed. Especially Groupon, who had struggled with restaurants while being desperately interested in developing ways to build more enduring, day-to-day relationships with their merchant partners (witness their purchase this summer of Breadcrumb POS in the restaurant space).
So this week, an investment thesis that hinged on a company positioning itself as a beneficiary of the macro trends that Groupon was leading, but which also was deliberately positioned as an alternative to the legions of Groupon-burned restaurateurs, becomes part of that same company.
Savored will continue to operate under its own brand, and I think Groupon will be very successful with this investment. Regardless what you might think about Groupon, those guys have an amazing sales machine, and unrivaled reach with consumers. Breadcrumb + Savored is a compelling two-pronged foray into restaurants, and a demonstration of just how serious these guys are about the business (if you need any more evidence of their commitment, just look at the fact that CEO Andrew Mason has been spending a night/week actually working in a high end restaurant to get a better understanding of the business!).
We wish Groupon the best with Savored. It’s been a great experience for us, and we’re proud of the work done by co-founders Ben McKean and Dan Leahy in building Savored. We were honored to be a part of it.
A bittersweet reality of my business business is the fact that the interesting & fun companies inevitably get bought, so our relationship with them ends. At least in this case I’ll be able to continue to be a very happy – and regularly satiated – customer.