There’s a good deal of buzz today about our latest Techstars investment in Ello and we’re really excited to be co-leading their Series A financing along with Foundry Group. However, this isn’t our first investment in Ello. We’ve actually been investors since January when we participated in their seed round along with Fresh Tracks Capital, eight months before Ello even launched their private beta. If you’re on Ello, you can read my partner David Cohen’s thoughts on our seed investment here. We invested then for the same two simple reasons we’re re-upping today:
1) We believe that most people want an online social experience free from a continual barrage of ads and the risk of having so much deeply personal data sold to 3rd parties.
2) We’ve gotten to know Paul over the last few years and believe that he’s the type of person Steve Jobs was describing when he narrated this in 1997. Simply put, Paul’s crazy. Crazy enough to believe that he can change the world. For us, he’s the type of entrepreneur we yearn to work with:
Can Ello succeed without selling out to advertisers? That remains to be seen. Will Ello sell out to advertisers? Absolutely not. In fact, we’ve signed and support the Ello charter which expressly prohibits this. Our investment is based 100% in our belief that people are willing to pay for a better online social experience. How that manifests itself will be determined over the months to come. One thing’s for sure: Paul’s been quoted many times saying “We’ll either build a business that doesn’t rely on third party advertising or the selling of user data or we won’t build a business.” As investors, we’ve signed up for that.
Ello has become a lightning rod in the media and social streams the last few weeks. It seems half the people absolutely love it and the other half can’t help scorning it because of its minimalist design and sometimes wonky user experience. One thing’s for sure, everyone’s certainly talking about it! For us, that reinforces the notion that people are hungry for a better online social experience. To those that are questioning the functionality and sparse feature set, remember that today, Ello is still a beta version. The mass exodus from Facebook was unexpected and the team is working feverishly to handle the deluge of new members. There’s a rich and exciting product roadmap driven by feedback from early users and the capital from this financing will allow the company to secure the human and technical resources necessary to roll these out at scale. We’re confident that in the months to come, the Ello experience will reflect what many people are searching for in an online social network.
Our investment will also allow me to work closely again with Seth Levine from Foundry Group. We became great friends when we were on the board of Lijit together and I’m excited to work closely with him again to help bring Paul as many resources as possible in building this exciting company. You can read Seth’s thoughts about Ello here.
I really hope you’ll take some time to come experience Ello. Personally, I really enjoy the simplicity and open space which lends itself to a beautiful visual experience. If you do, I hope you’ll connect with me, I’m @marksolon.
There’s been a lot of buzz the last few days about the piece in the WSJ on Monday featuring Bill Gurley warning that it’s starting to feel a lot like 1999 again, including a follow-up article yesterday in which other VCs echoed Bill’s sentiment to varying degrees. There’s certainly no denying that it’s been a pretty good ride since 2009. Bill’s one of the smartest guys I’ve ever met but I don’t know if this party’s just begun, halfway over or they’re about to turn the lights and music off – I’ve heard valid arguments supporting each scenario. I’ve old enough now to have been through a number of cycles in my career (starting with the crash of ’87, just month’s after I started my first job on Wall Street) and the only thing I’m sure of is that each downturn is different. They’re driven by different factors and it’s almost impossible to predict one based on historical data. If it were easy, timing the markets would be a piece of cake.
I’ve noticed one trend lately though which gives me pause; a growing hubris among entrepreneurs when it comes to the amount of capital they’ll need. I’ve had no less than five conversations with startup CEOs in the last couple of months where the CEO had an opportunity to raise more capital than they set out to and they were reaching out to me for advice on whether to take it or not. In each case they were leaning against it. To give some context, I’m not talking about setting out to raise $5 million and having $15 million in interest. All of these discussions were with seed or early-stage founders raising between $500K and $2 million and having investor interest that would allow them to raise an additional 25% – 50% more. All of them had strong conviction in their company’s ability to execute and hit the metrics needed to raise larger rounds of capital in 2015 and they were concerned about the dilution of taking more capital today.
I’ve been around long enough now to have seen what happens when macro events affect a company’s ability to raise capital and it’s not pretty. I also know that’s not the only reason to consider taking more capital than you think you need at the seed or early-stage. It’s an immutable truth that unexpected bad things happen inside all startups, even the great ones. Key customers and employees leave unexpectedly, competitors come out with new offerings that temporarily paralyze buying decisions, DOS attacks, negative press and a hundred other things derail startups. Having some extra cash in the bank to survive these episodes can be the difference between survival and shutdown. A great serial startup CEO once said to me “my job is to make sure we’re around tomorrow, a lot of days in a row.”
My advice to all of the CEOs I spoke with was the same. Don’t over-analyze the short-term dilution when you have the good fortune of increased capital availability. Think about the value you can create with the extra capital and how that might positively affect the valuation you might be able to command in your next round of financing and factor that in to the overall dilution analysis. A long time ago Jane Martin (one of my mentors and a long-time successful General Partner at USVP) taught me that startups should always “Drink When Served.” It was great advice then and it still stands true today.
I love seeing live music. I’ve got a steady group of friends I go see bands with and we’re always on the lookout to see up and coming artists playing in our town. Generally, we use an email chain to alert each other and drum up a group to see a show, often leaving people off or discovering a show too late.
Earlier this year, I met Bora Celik and Andrew Cornett, co-founders of Jukely when I visited the Techstars NYC program. When I first sat down with them and they told me they were going to change the way people discover and see new bands play live, I was pretty skeptical. Then they showed me the product.
Boom! Jukely has quite simply created the perfect method to discover, share, buy tickets and see live bands with your friends. The product just rocks. Check it out.
I just drove back to Boise after a terrific family vacation in the mountains. If you’ve never driven along Highway 55 in Idaho, it’s one of the most scenic stretches of asphalt you can imagine. I’ve driven it countless times over the years but this was the first time I had a chance to experience it in my “new” 1986 Jeep with the top off. The beauty and magnitude of the mountains and rivers was the perfect setting for reflection on some blissful time on a lake with family and close friends.
The most profound moment of our time away for me however came in the form of our dog Maggie. Two days ago, Pam and I awoke to the sound of Maggie crying (both Maggie and her sister Rosie slept on the floor of our bedroom in the cabin) and I jumped up assuming she was letting us know that nature was calling. I knew right away though that something wasn’t right. She was struggling to get up and I saw that she wasn’t able to use her hind legs. Her eyes grew wide and I got down to hold her. Within a few seconds I could tell she was in real distress and I yelled to Pam to get a vet right away.
I held Maggie while Pam found an amazing gentleman to rush to our cabin at 7am on a Saturday in a sleepy mountain town. The fifteen or twenty minutes it took him to get there (we feel remarkably lucky) felt like hours to me. They certainly felt like the last moments I was going to be spending with her and I wasn’t prepared for that. I’ve grown really close with her and I always imagined I’d have the opportunity to say goodbye to her like Owen Wilson did in Marley and Me – a sloppy affair with me sharing some well-thought out vignettes of our time together. This was sudden and real and all I wanted to do was end her suffering.
Maggie’s seizure was still happening when the vet showed up. After examining her, he told us that she’d had a stroke and was coming out of it, though there was no predicting yet how it would affect her but it was clear to him that she was going to survive. He shared stories with us that had both tragic and heart-warming endings. As she started to relax, he gave us instructions on how to care for her for the next day or two and to call him if things turned for the worse.
After about 90 minutes she calmed down enough to lay on the bed and take a nap with me. We both woke about 30 minutes later and she was looking better. I lifted her down to the floor and while as wobbly as a drunken sailor, she made her way down the hall and onto the porch where she staggered around for 15 minutes or so, falling down and dragging herself back up. Each time she got up, she did so with a little more confidence and she eventually got to the point where she could stand for a couple of minutes. We gave her some food and she happily ate it – a good sign for any Lab. We decided to take her down the steps to the lake shore and her tail started wagging – more good signs – and we watched her spend an hour walking in and out of the water’s edge – staggering, falling and standing over and over again on the warm soft beach.
Miraculously, by afternoon Maggie was about 90% of normal. We threw her tennis ball a few feet into the lake and she eagerly fought off Rosie to win the short swimming races – we were stunned. The next morning, Maggie was back to herself. She bounded up when I awoke, ate a hearty breakfast and resumed swimming activities with her usual vigor. 24 hours after thinking we were losing her, she was back to normal.
I spent a good deal of time in the jeep today thinking about her and the profound effect she’s had on me. Maggie’s the first animal that I’ve had a deep relationship with. I’ve had pets in and out of my life but I never connected with an animal the way I have with her. While a little late in life to finally experience that, I feel grateful for the twelve years I’ve had with her and fully recognize how lucky I am for each of our remaining days together. I told her this morning that she’s on bonus day number three now and the sparkle in her eye and the wag of her tail told me she gets it. We went down to play in the water one more time and I got in the jeep and left for home with a new appreciation for the special bond that we share.