I first met Matt Galligan when he started SocialThing and found him to be incredibly smart and enSimplegeogaging.   When he saw a tweet on one of my regular trips to Boulder and pinged me I was excited to hear what he was working on next. 

First, he had partnered with Joe Stump, the guy who helped Digg scale from it's original MySQL incarnation to the behemoth of coding prowess that it is today.  Although he wasn't the same Joe Stump who is known as The Shredlord, this Joe Stump was clearly a different sort of rock star: highly regarded, very smart, no BS and he has some amazing tattoos

And while the original company was a super cool location-aware gaming play, they quickly figured out that they could not build the app they wanted without a lot of work on the location awareness piece.

Which is a problem that any mobile application that wants to be location aware would also have.  Which is more and more mobile apps.  Soon to be almost all mobile apps.  Umm…Eureka!

SimpleGeo was born.

I won't rehash VentureBeat's article about the pain that developers feel when developing these apps today.  Needless to say it is hard and SimpleGeo makes it simple.  Dead simple.  Creating that simplicity is a huge opportunity for SimpleGeo and it's customers and one that we had to be a part of.

We're proud to be leading SimpleGeo's initial round of investment and to be working with these two entrepreneurs.  I can't wait for their first public launch of the product and look forward to the good things that this team will produce.

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Mintuit!

Sep 14, 2009

Mint.

Mint.com announced today that they were acquired by Intuit for $170 million.

It has been a short 3 years since we met Aaron Patzer at a STIRR dinner in the Valley.  Seven days after we met, he had a term sheet for his seed round and off he went.  During that time we have had a ringside seat while the company grew from a rough prototype on Aaron’s computer to an amazing personal finance tool with well over 1.4 million users and critical acclaim.

There are so many things that Aaron did right it is hard to remember them all, but the things that stand out include:

  • Building a culture that relentlessly focused on the customer experience and continual product improvement
  • Blowing away the crowd at the first TechCrunch 40 conference and meeting his initial 3 month goal for user acquisition in 36 hours.
  • Knowing when to hire a top executive team and then going out and doing so.
  • Continuing to own the vision of what Mint.com should be while letting that world-class team execute on his vision
  • Fundraising at exactly the right time with the right process bringing in awesome investors like Shasta, Benchmark, and DAG
  • Persevering to buy the Mint.com domain name when it looked like it was out of his reach.

While I’m sure that Mint would have continued to grow and prosper as an independent company, the opportunity to accelerate Mint’s growth as part of the Intuit platform was extremely attractive.  This is a great outcome for Aaron and his team we are thrilled for them.  The champagne will be flowing as freely at First Round Capital as it will in the future former Mint headquarters.

The only downside is that after three years I will miss working with Aaron as he continues to delight his customers.  It has been a great ride and I have learned a tremendous amount playing a supporting role as Aaron built this company.  My loss, however, is Intuit’s gain and I am happy for them as they work with Aaron and his team to take Mint.com to the next level.

A hearty congratulations to Aaron and team for a job well done!

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Procter & Gamble is one of many corporations b...

As luck would have it I am going to Cincinnati next week to spend some time with my friends at Procter & Gamble.  They were kind enough to invite me to be on their Digital Advisory Board a while back and as a result I am making my first trip out to this part of the Midwest.  Stan Joosten at P&G asked if we would be interested in doing an Office Hours in Cincinnati with their help.

Absolutely!

The whole purpose of these Office Hours’ is to give some time to entrepreneurs wherever they may be.  So if you are an entrepreneur in Cincinnati then come on out to the Rock Bottom Restaurant and Brewery on Monday, July 13.  Same setup as usual; expect to have 10 minutes or so to ask questions, solicit feedback, or just spend a little time getting to know each other.

Sign up here.

We’ll look forward to seeing you there!

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Resolutions

Jan 27, 2009

Chinese-ox
At the end of every year I always get asked what my New Year resolutions are.  My answer is always the same….I don’t make New Year resolutions (or even Chinese New Year resolutions— Gong hei fat choi! :-) .  If something needs to be tended to that would require a resolution, I would just as soon get at it immediately.

That being said, the gaps tend to get exposed at the end of the year.  This year it was a crazy fourth quarter led by the financial meltdown.  Like every other VC we were very busy helping the companies of our portfolio prepare for a very different 2009 than we could have anticipated six months earlier.  As a VC the portfolio is always my first concern and when the portfolio work expands to fill all the hours of the day not much else gets done.

For a firm that prides ourselves on our ability to make decisions quickly, this is a bummer.  We get introduced to thousands of companies a year and this year the number of introductions accelerated at the end of the year.  We met a bunch of companies in November and December that we are still coming up to speed on.  I think we’ve caught up with the backlog (if you disagree let me know ;-) but it has been a challenge.

We have put in place some new processes to insure that we live up to our promise to respond to folks in a timely way.  The hope is that we won’t fall behind again no matter how many companies we meet.  It won’t be perfect and there will still be glitches, but I hope you will continue to reach out as well as let us know when we need to do better.

Congratulations to Ofer, Dave and the folks at Sendori for their acquisition by IAC.  We met them just over a year ago and loved their novel idea for an ad network selling domainer inventory.  Clearly IAC loved it too and so now Ofer and Dave are going to take over the world from a much bigger platform.

We look forward to watching your continued growth and we hope you will look forward to watching this video!

Next, We Drink Coffee

Oct 15, 2008

As you might imagine, the conversation du jour in VC and entrepreneur circles is around the current market gyrations, the Sequoia conclave (and kudos to those guys for kicking off this conversation), the subsequent very smart opinions from VCs and entrepreneurs alike, and what happens next.

My opinion on what happens next?  Hell, I don’t know.   And in many ways, I don’t really care. If you focus on what you control, you shouldn’t either.

Listen, it’s not like we’ve just been through a time where the IPO cup runneth over.  We’ve seen nothing but bad news about exits for the last year and it’s clearly not going to get much better next year.   And, yes, it is likely going to be more difficult to get funding this week than it was two weeks ago.

I have, however, seen a lot of great entrepreneurs build great companies over the last four years; companies they started in very dark days.  The majority of them have not seen liquidity and now they probably have at least another 1-2 years before the liquidity window opens up again.  But they are psyched about their businesses and they are prepared to leverage the probable downturn to best position themselves for when we come out of this.

Over the next 12-18 months is again going to be a great time to start a company.   If you are thinking of starting one, read the deliciously vulgar and beautiful post by Dave McClure.  He says it better than I could.

If after reading that post you want to start a company even more, or you aren’t sure, or you just want a free cuppa joe, come talk to us.   Kent and I will be holding Office Hours at University Café on Tuesday from 11-1, coffee is on us.

Geography

Sep 30, 2008

I love living and working in the Bay Area for many reasons…the weather, the people, the landscapes, the startups.  It’s the best place in the world to be a venture capitalist.  However, there are points in the venture-funded economic cycle where it pays to spend time out of the area and I have seen enough local FNACs (“feature not a company”) lately to know that now is one of those times.

As such I have been spending time in Los Angeles, Portland, and Seattle and they are all great places.   But this cycle is the first that I have spent a signficant amount of time in Boulder.  I joined the board of Yieldex a year ago and started traveling there regularly experiencing both the rocking summers and the cold, but lovely, winters.  We recently made an investment in Gnip which means I get to spend even more time in Boulder.

If you haven’t been, you should.  It is an outdoor paradise with extreme skiing, hellacious whitewater rafting, and righteous venture capitalists.  Indeed, if I were starting out in a career, Boulder would be one of the places I would be seriously considering as a landing place.

The good folks of the tech community in Boulder are interested in seeing more people make their careers in Boulder and as such have created a brilliant event that you should be applying for.   An all-expenses paid trip to Boulder where you interview with a bunch of companies and in return they wine and dine you and maybe even give you a job offer.

What do you have to lose?

VCs and Risk Aversion

Apr 16, 2008

Paul  Graham writes another thought-provoking essay today on both why founders don’t sell early (or why they might) as well as castigates corporate development organizations and VCs for not being risk takers when it comes to valuing companies.  I think he is mostly right, as usual, as do a bunch of other people.

On venture investors taking risk, I get asked at least once a week something to the effect of “Where exactly is the ‘venture’ in venture capital?”  Frankly, I agree.   I am often surprised at how many venture capitalists aren’t very “venturesome”.

I think part of this is simply that venture capitalists have to put more money to work today.  I cannot overemphasize how many entrepreneurs tell me that they really only need $1MM but are asking for $3MM-5MM because that is what they have been told investors want to invest.  If I was a VC at a traditional firm and needed to invest $3MM I would be risk averse too.  Say that I am buying minimum 20% of the company.  That implies a $15MM post-money.  For me to get my 10x return on just my initial investment, I need an exit of $150MM to make it work.   It takes a darn good company to exit for $150MM these days (in fact, more than 75% of all M&A transactions in the last four years have occurred at prices lower than $150MM).  If I have questions about the team, the market, the distribution strategy, the competition, or even if I have a bad consultation with my ouija board, I am going to pass on the deal.

This is why I like seed investment and the First Round Capital model so much.  Our initial investment is much smaller (our average initial investment is $500K) and the post-money valuations are correspondingly much smaller.  Which means to get to our 10x takes a much smaller exit. And hey, if you want to take the company big, I love that too.  The optionality is good for both investor and founder – I really enjoy the alignment that comes from sitting on the same side of the table with the entrepreneur.

I do want to take issue with something that PG said.  Specifically:

“I’ve tried to explain this to VC firms. Instead of making one $2 million investment, make five $400k investments. Would that mean sitting on too many boards? Don’t sit on their boards. Would that mean too much due diligence? Do less. If you’re investing at a tenth the valuation, you only have to be a tenth as sure.”

If a typical $2MM Series A is done at a $6MM pre-money, then the hypothetical seed investment Paul refers to would be done at a $600K pre-money, leaving me with 40% of the company for $400K. Good deal if I can get it but I don’t see a lot of those deals today.

Paul:  If you know of any companies that are looking for this structure, send them my way!

I had a great time at SXSW this year, but the conference has gotten so big that I missed a lot.  One session that I shouldn’t have missed was titled “The Art of Self Branding.”  Most of the session was spent talking about First Round Capital portfolio company Mint.com and how good a job they have done on creating a strong brand.  It was such a flattering picture of the company that some assumed the presenter is a paid Mint.com consultant.  She isn’t, but Lea Alcantara, next time you are in San Francisco look me up and I will gladly buy you lunch.

As many of you know, at this time last year we were looking for our first hire in the San Francisco office. The response was overwhelming, as were the number of really good people that we met through that process, and we ended up being able to work with a great guy.

We are again in hiring mode and looking for a Senior Associate for our firm, based in either our San Francisco or Philadelphia office. You can find out more about the job here, but I would encourage you to be creative if you are interested. Last year I received pointers to blogs, written business plans, some detailed financial analyses (for late stage private and some public companies, natch), as well as the standard resumes and cover letters. Feel free to express your interest in a way that reflects your understanding of the very early stage venture market.

We’ll look forward to hearing from you.