gdp's Comments

ben's blog : Why Andreessen Horowitz Just Raised $650,000,000

Wed, 3 Nov 2010 16:28:12 +0000

Thanks for the post today. There are very few people who can do all stages of investing because very few people actually have experience across all the investment classes. As someone who has worked at various hedge funds - and done everything from seed stage VC to distressed debt at the end of a company's life (Pandora to Tribune currently) and everything in between, I'm always amazed by the stratification in the investment world. Investing is investing - and while the role of the investor changes as the companies become bigger (more governance issues) - the basics of making good investments don't change - great teams, great products or services, great execution. You may focus more on one of this spectrum depending on the investment - but it is always the same. Congrats on the fund.

Feld Thoughts : Deeply Held Beliefs

Thu, 28 Oct 2010 19:57:03 +0000

Thanks

so average of 7 deals a year - with $7M per deal in terms of initial investment plus capital reserved for add on's. $50M per year - 5 years of investments - there's your fund!

Just a quick question for which I probably should know the answer: when you make an initial investment - you obviously call capital for the initial funding amount - but do you actually call down the capital you reserve for follow on's? or do you just tell people what you think you should reserve for follow on's and call it later?

VC Adventure : How to teach your child to ride a bicycle

Thu, 28 Oct 2010 04:08:34 +0000

Yeah grass is more difficult to ride on for sure - but it sure does cure the fear of falling - and once you get it down on grass - the concrete is easy. I've seen both methods - and they all work well.

Congrats on the new fund.

Feld Thoughts : Deeply Held Beliefs

Thu, 28 Oct 2010 03:59:47 +0000

So that begs another question - if the cost of start-ups has continued to decline - and you want to keep a partnership to 4� - and you want to keep partner interaction to a maximum, are you actually going to fund more companies that need less \"adult supervision\" or are you going to fund more capital intense companies (which I actually believe may be a competitive advantage ina world where everyone flocks to the lean start-up) or are you simply going to be able to keep your pro rata stake far deeper into the growth of a successful company?� Or do you bifurcate the business and run it like you have been running it - and leave a large amount of capital either unallocated and unused - or do you do some later stage deals where you can put more capital to work?

I know I probably sounds like some sort of pension consultant - and for that I'm sorry.

I'm actually just really interested in how you are thinking about the business.

Feld Thoughts : My Quest For Measuring Everything

Wed, 27 Oct 2010 23:49:09 +0000

Are you a binge sleeper?

Intense work for a few days then a total crash - or do you somehow manage to just conk out for a while.

I'd love to get 9 hours just one night! Currently running on about 7 hours per night - and 8 on weekends.

Not enough.

Feld Thoughts : Deeply Held Beliefs

Tue, 26 Oct 2010 13:38:20 +0000

I like them. Clean, concise and clear. One question: how come $225M - is that something like $50M per partner - with the remaining $25M going to fund overhead? Or is that just where you ended up on the first fund size - so you figured you would keep it there? I really like the idea of working directly with the companies. With funding costs coming down - the large banking like structures are really going to end up hurting. Seems like you need a barbell strategy these days - lots of small investments on the low end - and enough firepower to really support companies that take off. Last question: what if one of you wanted to leave for whatever reason? Would you then just shrink to 3 and keep on - or look for a replacement then? Do you have key man clauses in your docs for all 4 of you? (I doubt it - wouldn't exactly be great business)

VC Adventure : How to teach your child to ride a bicycle

Wed, 6 Oct 2010 18:14:16 +0000

Love it. I read a technique in bicycling magazine which is very much like yours except - we used a grassy hill (slight incline) and we kept the pedals on so that they could get the feel of putting their feet up. Very quick learning curve - few hours and they could pedal down the hill on their own. The good news about grass is that kids don't get frustrated if they lose their balance and fall (it is soft and they are close to the ground to start with) and because the grass is hard to pedal in - you never get going all that fast - so when you make the transition to the road - it is far easier.

Feld Thoughts : An Aurora Over Alaska

Wed, 6 Oct 2010 15:15:44 +0000

WOW! I've always wanted to see the Northern Lights - just never made it up at the right time. Fantastic image.

Feld Thoughts : My Quest For Measuring Everything

Tue, 28 Sep 2010 15:10:52 +0000

Went to your fitbit page. Dude - it said you managed to sleep for 12 hours on September 6th. How is that even possible? seems inhuman.

Feld Thoughts : Gmail Has Won Me Over

Mon, 27 Sep 2010 16:31:45 +0000

Spent the last 24 hours trying out Gist. Love it. As a guy who has a gmail, google apps, and exchange account - its great to actually get all the contact info into one spot. Now I just need to clean up all the data. It would be great in gist to be able to customize the UI so that you could just add and subtract the elements you would like to see. A little busy. But great so far.

VC Adventure : There Is No VC Seed Investing Signaling Problem

Thu, 16 Sep 2010 20:36:45 +0000

I tend to agree with you - and I wrote a lengthy comment on Brads blog when he posted on the subject. What it really comes down to is whether you are a sheep or not. If you are a sheep then there is a real signaling issue. If you do your own work, come to your own conclusions, make your own decisions - and have partners who are similar in their thinking and trusting in each other - then it doesn't make a damn bit of difference who is in the deal. I got into Pandora after Tim Westergren had been raising money for 5 years. The investors who were in there were Walden VC, Crosslink, Selby and Labrador. All of these are good investors - but none of them at the time was huge or one who signaled that others should follow. Now that it is successful, we have GGV, Greylock, and if the press is right Elevation. And those are just the guys who got in - the interest has been pretty wide. I was investing from a hedge fund in NYC - with no VC contacts. I would argue that I was a negative signal - a sure sign that the professionals had left the field. Go figure. I've written it before - in order to be truly successful in investing - you need to be willing to be wrong and alone. You never run into a signaling problem that way

Feld Thoughts : Entrepreneurs Dislike Signaling; VCs Dislike Free Riders

Fri, 10 Sep 2010 02:00:25 +0000

I understand your position completely, and I do understand the issue of free riders - both from the standpoint of those who would like to ride for free and the consequences for those who try. I think my comments stem more from reading the constant conversation about "who is signaling what" and whether angels or super angels should get a free pass on this issue etc.... Why should an angel be allowed to be a free rider - and not a VC? How is anyone with more information than you not investing not a bad signal - no matter who they are? The truth of the matter is that you are in the investing business on a professional level (be that VC, angel, super angel or whatever hybrid structure you come up with) - and all things being equal it is great to work with constructive partners who all have similar viewpoints, communicate regularly, and are easy to get along with. It is great to support the companies you are involved with - and I certainly advocate it completely. But it just doesn't always work out that way - and there are a lot of different ways of dealing with those differences - however, I don't think that people should feel forced to play along just so they don't get crushed in a pay to play round, or to make people feel like they are going to be great partners all the time. I guess what I am saying is that when people disagree on an investment - for whatever reason - there should certainly be good discussion about it - so everybody understands - but then move on. Truth is, if a VC continually gets "cold feet" their record will ultimately reflect this in the form of plenty of strike outs and "crushed in the pay to play rounds" and their IRR's will dwindle as will their assets. Being in the professional investing business myself, being a bad partner is certainly something that gets around pretty quickly - and you don't want to get stuck with that label in any way. It's too small a world.

Feld Thoughts : Entrepreneurs Dislike Signaling; VCs Dislike Free Riders

Fri, 10 Sep 2010 01:34:06 +0000

Sure, if you can find like minded investors then great. If you all agree - then by all means go along. And if you don't then you should probably make every effort to come to some sort of middle ground. Ultimately, I don't think it is so much about going along - but ultimately succeeding. If you make good investments and get good exits people will go along with you - and companies will want your involvement.

Feld Thoughts : Entrepreneurs Dislike Signaling; VCs Dislike Free Riders

Thu, 9 Sep 2010 04:45:59 +0000

A good rational look at this issue for sure. However, I disagree with one point here that crops up over and over again in the VC world, and that is this issue with free riders. It would seem that it is almost an unwritten rule of the game that if things go well - you do your pro-rata - or back off for additional investors to come in at higher valuations, but if things are going sideways, and one party wants to continue - the other should naturally follow along - and if they don't - they are somehow tainted and labeled as a free-rider. I think in any given investment situation, rational people will disagree with each other about the investment merits of a company - and what their risk appetite is for the investment. These differences can arise solely as a function of the company in question - be it performance related or personal issues with the team running the business - but they can also occur due to a market viewpoint, competitive investments in the same fund made afterward, other opportunities that the fund is seeing, a lack of additional funds to invest and on and on. In these cases what you are saying is that if I do not agree with you for any reason - then I should sell my shares back to the company - or to a new investor coming in and get out of the way. Of course, what you are really saying is either: a. if you are not with me, then you should not get any benefit from the optionality in your original investment and thus you should get out or b. when I invest in a syndicate deal, I only want to invest with people who have similar though patterns to myself and my partners, and are essentially willing to abdicate their fiduciary responsibilities to their investors to whomever wants to continue investing in a deal going forward. I think both of these statements are wrong, and anybody who signs up for such a program is a madman underserrving of investors capital. Free riding is simply a fact of life in the investment world - which should not be necessarily punished, but accepted for what it is - a decision to accept dilution while waiting for the company to grow into the next round - or hit the exit. By trying to get a free rider to sell stock back - what you are really doing is trying to protect you own economics by limiting dilution by a new investor - rational, but not necessarily fair to the original investor who was there at the beginning with you. In an ideal world, I agree with you in principal - but it is rarely an ideal world. Given the typical VC structure - with annual management fees and incentives on top of that - it rarely makes sense to exit an investment unless you really believe it is a no hoper - and in those cases - I doubt you will get much push back from investors. From the point of view of the founders - of course you want blind support at every level - because it preserves the status quo at the board level and limits fund raising time - both of which are essentially necessary evils - but again, this is rare in reality, particularly with stratified funds (early stage, B stage, late stage etc...) I'd love to hear what you think - or perhaps I've hear it - in the post.

Feld Thoughts : Serious Questions For Super Angels

Wed, 1 Sep 2010 12:06:16 +0000

You hit the nail on the head with the issue of scaling the angel business. Like anything that is people and time intensive - the ability to grow it depends almost solely on the ability of the funds to continue to add other great investors to the team. This worked fine when the business was built around larger deal sizes, and you could average $50M in investments per partner - probably spread over 10 active investments. That's $1M in fees less expenses (associates, etc...) so it is a great living - with tons of upside optionality. Look at the Super Seed model. It is more like $10M per partner spread out over 20 investments. That's $200K per year - but you have to cover expenses out of that - which shouldn't be high, as most of these are built around existing personal networks - and a lot less partner time per company. So to make this work logically, you need to band together as a group of Super Angels, with like minded individuals and investors so that if you trust Chris Dixon, or Chris Sacca, or one of the other prolific high profile super angels, you can invest alongside them - and not give any time to the investment (or very little) - while you do the heavy lifting on other investments. What actually may be excellent about the super angel model - is that it turns the business from a fee based business (where partners could literally not contribute for the better part of a decade and get paid well to show up alive) to one where performance is all that matters - since current income off of smaller funds is the only way to benefit as the GP with the Super Angel model.

VC Adventure : Has convertible debt won? And if it has, is that a good thing?

Mon, 30 Aug 2010 12:32:34 +0000

So once you wade through all of this - what you are really saying is that convertibles are essentially a lot like preferred equity - only without a price. But the issue is that while the pricing conversation is essentially deferred - it is really not - because of the issue around the cap at which the conversion will occur. So, since you effectively have to price the two issues (preferred or the conversion cap) either way - the only issue is really the cost of debt over equity (lower) and the issue of not having a definitive lead willing to put a stake in the ground. I've done em both ways (as have you obviously) and I'm not sure there's a real difference in outcomes other than the cap negotiation - and the deferred legal fees on the first preferred offering.

Feld Thoughts : My Obsession With The Product

Mon, 3 May 2010 14:45:19 +0000

Incorporate them into "my" thinking - or "their" thinking? I think it is "their." What is great about throwing ideas at the Pandora team is that they have thought about a ton of them already - and have really considered the effects each of them would have on the user experience - the UI implications, etc... I told you so never helps - just move the company forward and trust in the decisions of management. Unless you are working at the company itself, chances are that management is spending a lot more time thinking about these ideas.

Feld Thoughts : My Obsession With The Product

Mon, 3 May 2010 14:07:57 +0000

Really great post Brad. Like your experience with Feedburner - I ended up involved with Pandora for the exact same reason. Had an issue with the product as a user - sent in an e-mail - and they dealt with it immediately (I needed an additional piece of software to hijack my stream and send it to a Crestron system). Got to know Tim and Joe and ended up leading the next round. I think the hardest part of being obsessed with the product as an investor is just how far you can take your own obsession in pushing the team to move the product in a direction you wish it to go. I have bombarded the Pandora team with a lot of ideas over the years - and my number #1 idea has never been implemented. I live in hope - but understand that they have limited resources and an exponential growth rate. Hard to argue.