Greg Galant of Sawhorse coined a term yesterday that captures perfectly what I thought of my 8th SXSW. We were having a discussion about big brands taking over the scene and he called it "conference gentrification". That's exactly what has happened down in Austin. The small startups and individual creatives were early to SXSW and created a great, authentic experience over many years--a "neighborhood" if you will--with a certain attractive vibe.
Brands, in search of interestingness, flocked to SXSW in search of the next cool place to be, like young executives moving into the big glass luxury buildings on the Williamsburg waterfront. What was once the GroupMe Grill--a stunt to buy out a little food shack across from the convention center that gained conference-wide attention--has become the Citrix GoToMeeting grill. Deloitte had a booth in the convention center where Twitter flat screens once stood seven years ago before anyone knew about the startup service.
I might sound like I'm shaking my fist saying "Back in my day!" and "Get off my lawn!" but this isn't necessarily all a bad thing. It's just different. New York neighborhoods that experience growth and change may lose that authentic feel, but they gain much needed economic activity while crime tends to drop. SXSW has become a fun way for lots of brands to interact with startups and creatives--different but not the same.
Every conference has its own neighborhood. The Collision Conference, for example, sold out right away because it comes from the same folks that put on The Summit. Those conferences feel a lot like a planned suburban neighborhood. They have no long organic history, but everything is beautiful and setup exactly the way you want it. A park near a lake, a school, and a three car garage--complete with Bill Clinton, Elon Musk and Snoop on stage prognosticating the future of civilization.
Other conferences will always feel like Red Hook--out of the way and tough to completely gentrify because of a lack of public transportation. Those are the hacker and designer conferences and the Bar Camps--not easily accessible to the general public but quite worth going to.
I love Red Hook and I love conferences like that. I'm looking for more. I want to spend more time with people who aren't big names where everything at the conference isn't perfect. I met Raul from Tinybop at the first Brooklyn Beta--a community run conference that had two investors and 148 designers, devs and creatives in attendance. Like the stereotypical white dude that has little interest in living next to other boring white people I'm the VC that wants to find out where the other VCs aren't.
I'm fully aware that makes me the conference gentrifier, but my hope is that where I go can stay under the radar for at least a little while before my kind changes things.
About seven years ago, I wrote a post on breaking into venture capital and I continue to point the five or six people a week who ask me how to break into venture.
Today, I want to add two addendum to it, based on the work of two up and coming women in the NYC tech community.
Yesterday, Amrit Richmond announced her new employment at RRE as Director of Community & Platform. The key to her getting the job was that she had essentially started doing the job long before it ever got announced. She had been running social media part time for a smaller fund and had built up a following with her own tech newsletter. No one was paying her to write the newsletter, but most of the team at RRE was already on it.
When Amrit was applying, I told her she was a lock for the job. When she asked why, I said it was because if anyone was better qualified, we'd already know about them by now. The candidates for venture capital roles are already out there and usually in plain sight and there simply wasn't anyone out there doing what Amrit was doing who wasn't already fulltime at a firm.
Another case in point, Spark Capital just hired Kate Bolin--someone that had been interviewed at a portfolio company of theirs that had made a good enough impression that they labeled her as someone to stay in touch with.
If you need to introduce yourself to a VC firm, you're probably not getting the job.
The opportunities, however, are different than they used to be. At the early stage, the ranks of the non-partner investor are disappearing. VC firms are going back to being mostly partner driven shops, where dealflow and decisions stay up top. They are, however, staffing up with specialists. Like lefties out of the bullpen, VC firms now have recruiting partners, pr and marketing experts, technologists-in-residents--and USV even has an on board activist. If you can't walk into a firm and tout a specific skill that is a benefit to portfolio companies, you're going to have a very tough time getting in.
And no, analyzing startups is not a portfolio company benefit. That's a benefit to the VC firm. To the company, as a recently minted MBA with no startup experience who wants to run the 4th year numbers, you're just a pain in the ass.
One thing that I see too many people moving from the finance world doing, both in attempts to get into VC and to startups, is relinquishing the resources they have at their old job. They can't wait to get out of their bank or consulting firm, but they forget that they have connections to something that startups want desperately--money. If you want to break into the startup world and you come from investment banking, don't forget the one thing that your resume says that actually speaks to entrepreneurs--you know potential investors.
Christina Bechhold didn't forget that--and so she co-founded her own angel group. It's a group of her peers from the professional world--up and coming titans of finance and consulting with good salaries and not a lot of dependents. She and her co-founder Graham Gullans went around to all the other early stage investors in NYC to learn best practices, and present themselves as a good potential co-investor. There's really no easier way to get into venture than to find some money, reach out to smart folks to learn, and start writing checks. Being good at it takes a bit of luck, hard work, skill, etc., but in a city like New York, with it's access to capital, "getting in" shouldn't be the hard part.
The NYC startup community maintains a positive, supportive atmosphere. We celebrate a strong effort.
However, that often makes it hard to tell who actually excels at their job and who just mails it in or got lucky. This goes for founders, employees and investors alike.
I was just noticing that a professional acquaintance of mine just changed jobs for the third time in two years--going from startup to startup to startup without, ostensibly, accomplishing much at any of the companies. They certainly didn't become huge successes. Yet, for some reason, everybody seems to think he's really good at what he does. Why?
The same goes for investors. There are a few obvious investors with great track records of repeat success, but when's the last time you really tried to value an investor's portfolio. That VC speaking on the panel, are the deals you know about really doing that well? They raised more money, but when? How long ago? At what valuation? Are they making real revenue? Are the exit prospects for the company any good?
Even if their record looks good because of that deal, was it really their deal? Did they lead it? Will the entrepreneur count that investor among their most helpful? Would the entrepreneur enthusiastically include them in the syndicate of their next venture?
There are a lot of founders with questionable records, too. If someone bought a company for $50mm after a year, before it became a business with actual revenue, what are you really crediting the entrepreneur with? Could you really call what they did building a business?
There's really no substitute for research. If you're going to pick an investor, hire someone or invest in a founder, you need to figure out what they specifically did to create value--and how what they did was something unique to them. Could anyone have done what they did, or do they have their own special way of creating magic?
We need to raise our expectation level--especially in the media, on panels, and in our everyday discussion. Let's be a little more discerning when we're dishing out praise. Let's figure out who actually went above and beyond, versus getting lucky riding a wave.
Go pitch a VC with an idea, and they'll tell you to build it.
Go to them with a prototype and they'll tell you to launch it.
Launch it, and they'll tell you to get more users.
Get users and they'll tell you to get paying customers.
Get paying customers and they'll tell you to get bigger, enterprise clients.
Get enterprise clients and they'll tell you to get them faster, because it seems to be taking too long.
It frustrates me to no end. If someone actually did check all these boxes, it would be a Series B deal, not a seed investment.
Last I checked, taking risk, and being ok with uncertainty, is supposed to be our job. No risk, no return.
Technology is moving faster, markets are changing more quickly and uncertainty seems to be increasing.
In my mind, that creates the opportunity for increasing returns. New markets are available. We're doing things in personal health, mobile, and physical products that we never could have done ten years ago. TVs are changing. Finance is changing.
Risk, over the long term, is going to be rewarded, but there are no sure bets. Let's remember that, people.
If you're not cool with risk as an investor, may I interest you in some very nice fixed income jobs.
*This post was not directed at anyone specific.
In 2007, I met Rob May for the first time in person at the first SXSW I ever went to. In 2010, I funded his company, Backupify, which has gone on to raise over $19 million in funding and is set to have their best year of revenue to date. I didn't meet Rob at a big flashy party. We just hung out in a small group of nobodies, having chatted a bit through our respective blogs before.
In fact, as I look through the photos from back then, I realize that I funded two nobodies from that group--the other being Michael Galpert at Super.cc.
In 2008, I went to breakfast with Hilary Mason while I was down there. This picture was just after we got back to the conference center, just hours before the meltdown that would be the Mark Zuckerberg interview. That breakfast would lead to me hiring Hilary to work at my startup, Hilary deciding to stay in NYC fulltime, co-founding hackNY, and just generally being a great community advocate for science and tech in NYC.
Just breakfast. No big party.
Last year, my friend Danielle Gould invited me to a small FoodTechConnect dinner, where I met Stephen Plumlee from R/GA. Stephen is a great guy and a Brooklyn resident. We connected around R/GA's role in the tech community and here I am now, a mentor in the R/GA hardware accelerator.
Over and over again, it's small groups and conversations that I've had down in Austin that seem to have the most lasting impact on my business and career--so as the parties get bigger, and flashier, I find myself retreating to smaller enclaves. The best spend of sponsorship money I've ever seen might be the $50 in balls and chalk that Dennis probably spent building the Foursquare court that beat Gowalla in 2010.
This year, I might not even leave my apartment for maximum ROI.
I'm only half kidding. I'm putting together a small series of dinners where I don't have to worry about reservations and long lines to eat and get rushed out. I've got some local chefs lined up to make some fun and authentic meals and I'm putting the coolest folks I can find around the table. SXSW with all its buzz and hype is just the backdrop to the conversation over good food, and I suppose also the excuse that brought all these people together in one place.
A few sponsors have inquired about participating and I might have a opening for more. The best part is, the cost pales in comparison to the huge blowout ragers that no one will ever remember and no meaningful business will ever get conducted at. Drop me a line at firstname.lastname@example.org if you might want to participate.
I can't guarantee you'll sell something, win VC dollars, go viral, etc... but I'm a big believer if you focus in on just a small handful of people at a time, or even just one, and give them your attention, that will pay back dividends over a very long period of time. Sometimes, all it takes to make a friend is to treat them like a person instead of a connection.