Jessica Livingston @ Ron Conway — Partner, SV Angel
Twitter first: what was it like when Ron first invested, what he saw in them?
Ron met Evan Williams because of Google/Blogger, invested in Odio which failed. Ev gave all his investors their money back, which is rare: 40% of SV Angel's startups go out of business, they get nothing back. This resulted in "amazing human feelings" -> Ron pledged to put $75k in whatever Evan did next.
Initial reaction to Twitter?
Great, let's see if it works. Do the users like it?
What Ron saw in founders of Facebook/Pinterest/Snapchat early on?
Facebook — started with Sean Parker since they invested in Napster/Plaxo. Metrics were amazing even at the beginning. Never argue with the metrics. Amazing thing about Zuck was the vision and confidence he had. Was already thinking big then.
Snapchat — saw the pattern. Facebook, Twitter, Instagram, then Snapchat. Phenomenon happening right now when social applications are changing the way people behave and how they communicate with each other. Huge opportunity for more companies in this space.
Ben Silbermann's story at Pinterest: really long road?
Great example of a founder where it didn't explode right away, had to keep iterating for a year and a half. A guy who's very persistent, stayed close to his users — had focus groups in coffee shops, call them the next day to make sure they were still using the product, keep getting feedback, keep iterating. Saw in Ben a very unusual entrepeneur: a lot are outspoken, aggressive; he was softspoken, very cerebral and thoughtful. He's a founder that has a calming effect: winds up his team in a cerebral way, making everyone calm. He's rifle focused on the product. Didn't care about the outside world, only is the product the best it can be, are our users loving it?
How does SV angel help?
Funding, M&A transactions, introductions (e.g. Apple for Pinterest)
About fundraising: what are the biggest mistakes that founders make, what are some of the best qualities people show?
Biggest mistake is that founders aren't focused enough on finding the investor who can add the most value, too concered about valuation and dilution. Those are secondary to whether you can bring in a top tier investor who adds value to the space you are in. Can the investor do a lot for this company? Jeff Jordan at Andreessen Horowitz was like that for Brian Chesky, Airbnb.
Keep the process moving quickly. Get one term sheet ASAP so you have a forcing function — investors don't like making decisions as quickly as an entrepreneur needs them to make a decision. Then you can truthfully call the other investors, your investor can call others, saying we have a term sheet, going to submit it in 24 hours, you better do it too or you're not in the running. Make sure you get the commitment in email: have seen many transactions fail because someone doesn't remember what they said, especially M&A transactions.
What are promising signs that you see when meeting all these people?
Product focus is really important. Didn't realize this until the last 5 years: looking for founder qualities that say they're rifle focused on the quality of the product. They don't want to be distracted by press, etc.
Other factor is decisiveness: so important to make decisions that keep momentum in growing your company. Founders make a lot of decisions on growing the product; need to use the same skillset for building your team, deleting from your team. Hire fast, fire fast. If there's dead wood in your company, everyone in the company already knows it, and you can make morale go up if you make a decision that someone's not working out — even if they're a cofounders. Are others going to want to work for him when he is growing his company? Can this person manage a thousand people?
What if someone can't manage a thousand people at the beginning? Can people grow into the role?
Early days of Twitter: Jack Dorsey had trouble managing. He thought about his shortcomings, went and made Twitter better, left Twitter, invented Square, built Square flawlessly. Recognized his deficiencies, built his management team around that.
What has changed, what has stayed the same since 20 years ago?
In 1979, to get your company funded, you had to be doubling every year, 20% pre-tax profitable — already successful. Today, the cost of starting a company is tiny, lots of people willing to take risks and invest. The climate is significantly better today.
The other thing is mobile: watching the Internet convert from the web to mobile. Mobile first socials apps are so different from everyone writing for the web.
Companies moving to cities, especially social.
When Google started, the algorithm was intellectual property. Today, it's the design/user interface that leverages the company.
In all these years, what has Ron been surprised by?
Watching entrepreneurs mature at the speed of light when they have to. Larry Page, Jack Dorsey, Zuckerberg, Ben Silbermann — as their companies took off, the founders had to mature, manage thousands of people, keep their product focused. All four of these people met these expectations. Watching that happen and helping them do it was the most satisfying.