Five Lessons Learned Getting to a Second Fund

Today, I'm happy to announce that Brooklyn Bridge Ventures, the firm I founded and continue to run as the sole General Partner, has raised a second fund, totalling $15.1 million in commitments.  Nearly all of our existing investors returned, and they were joined by a couple of new family offices and a prominent college endowment.  

What does this mean?

Most importantly, I get to keep going.  Having a job is way better than being out of one.

Fifty investors took a shot on me four years ago to lead rounds in New York City at the earliest of stages--prototypes, betas, Powerpoints, napkins, or just people.  I had all of seven deals to my name in a short, two year track record.  Granted, two of those companies had exited for great returns, but it was also on behalf of a brand name firm whose name I wouldn't get to carry around all the time anymore.  

Who knew whether I'd even be able to get into any deals on my own?

Thirty-five deals later, the first Brooklyn Bridge Ventures fund has invested in great companies like Canary, Orchard, Floored, Tinybop, Ringly, goTenna, Hungryroot, Ample Hills, Tinkergarten, Homer, Logcheck, and others that I am proud to be associated with--not just because they are doing well, but because their founders work hard, treat people right and have great insight and curiosity around the problems they've tackled.

Second, we have more to offer founders.  Before, when I would lead a deal, I might be able to write a check of about $200k or so.  Now, that number will grow to $350k and the firm will be able to do a small amount of follow on investment.  Truth be told, I still believe the best ROI to be had is in the very first round, but now even a small follow on will help an entrepreneur answer whether all their existing investors are participating.  I won't lead another round, but even this small amount can help make that next round's story straightforward and consistent. 

Nothing else is really changing.  The fund doesn't have a specific industry focus and it will continue to work with New York City companies.  The increase in fund size doesn't mean I'll be going any later either.  We'll still focus on companies that have yet to raise $750k in prior rounds. 

There are some things I learned about running a first fund over and above finding great companies that I think are important for new managers to keep in mind:

1) Venture capital will be humbling.  

You're going to wind up failing a lot.  You're probably not going to have the "coolest" fund or always be first to the trend with the most hype around it.  The founders that are going to make your career aren't the ones that everyone knows already, inviting to all the best parties.  They're the ones working on the companies that were a struggle to get people to invest in--so much so that you'll question your own judgement a lot when you're the first yes.  

2) Focus on getting known for being helpful and hardworking--by actually being helpful and hardworking.  It's easy to get swept up into the cult-like status around venture capitalists as kingmakers or thought leaders.  The truth is you won't really know how good you are for years and years--so don't be so quick to think you know what you're doing, no matter what the media tells you.  This will be my seventh year of leading investments and it's been fifteen years since I first joined the asset class--and I still feel like my learning has just begun.  Don't worry too much about the new new fund everyone wants to write about more than they want to cover what you're doing.  

3) Have a consistent focus.  Since I started working at First Round Capital back in 2009, very few early stage investors seem to be doing the same kinds of deals at the same stage today as they did back then.  There are firms that started after that date that have gone on to raise three, four, or even five funds that are ten or twenty times the size of their original offering--even though we're just figuring out now how good those investors are at what they started out doing.

It takes so long to hone your craft in venture capital that, for me, I could never be successful changing up what I do all the time.  The deals I do today at Brooklyn Bridge Ventures are largely the same kinds of deals I was looking at seven years ago and they'll be the same seven years from now.

4) The investments you make in relationships last longer than most of the companies you'll invest in.  Last year, I got to back a founder that I first met ten years ago when I was an analyst at Union Square Ventures.  I have investors in my fund that have known me that long--and others who took the time to watch my first effort over three years before investing in the second.  I also made an investment in a founder that I previously backed once before--my first repeat founder.

I've spent a lot of time over the past four years thinking about how I treat other people--how I can make people feel respected, comfortable, and listened to.  I'll never get it right 100% of the time, but I realize now, more than I ever have, how these relationships add up to a network over a career.  I take no greater pride than when a founder I passed on recommends me to another founder because they feel like, even though they didn't get a check, they had a good experience with me.

5) You need a plan rooted in reality.

I highly recommend that any new investor builds out a cash flow model around their strategy.  Are the assumptions realistic or do you need to find eight IPOs in a sector likely to only have four of them?  What's your average going in price?  Will you ever be able to put all this money to work?  When do you expect these companies to fail and how many checks will you need to write before that happens?

That's the difference between angels and VCs.  Success doesn't just come from having a good network and getting in cool deals--it's about building a portfolio strategy and having something that works at scale and over time.

One other note: This isn't, and never will be, about the money.  There are a lot easier and quicker ways to make money than by running a seed and pre-seed fund.  I do fine and pay my bills but greater scale, more management fees, and a bigger operation would undoubtedly put more money into my pockets in the short term.  It wouldn't, however, enable me to make better investment decisions or provide me more time to spend with founders.  That's my only goal--to responsibly invest my Limited Partners' capital as part of a consistent strategy by being helpful to high potential founders.  

Everything else is just noise.

How to Run Startup PR Like an Election Campaign

Campaigns, conventional or not, are highly motivated and energetic storytelling machines.  They come up with a narrative, figure out who they want to get it in front of, and work like all hell every single minute to get it out there.

That's the kind of pace a startup needs to be on--except that most startups treat their PR as if all you need to do is to launch your message at a debate and cross your fingers after that.

Here are five things startup founders can take away from the way campaigns work:

1) Campaigns have a message.

And it's not only "Vote for my candidate".  It's more complex than that.  Sometimes they want you to believe the economy is good or job creation is sluggish or we're at war with terrorism or values or crumbling or whatever.  There are other things they know will get you to cast a vote your way if you believe.  So, maybe some of your campaign is about having the best computer vision team or being smart about retail distribution--or that cars will drive themselves one day.  Whatever the underlying supportive arguments those are, startups need to layer them on top of each other to support the key things you need--sales, funding, hiring, etc.

2) Campaigns work on a schedule.

First we're going to go to this state and say this to this audience, then we're going to that state and then we're going to hit up this talk show.  Campaigns are about editorial logistics.  Who are we telling today's message to and where?  

So many startups but all their eggs in one basket--the launch--but fail to create anything that looks like an editorial schedule that thinks about opportunities to share your message over time.  What conferences should we be asking to speak at over time?  What events should we run ourselves?  When will we write this blog post.

Without a schedule and a plan, you're just a lunatic with a Twitter account shouting at everyone.

3) Campaigns win influencers.

They get endorsements.  Teachers unions, former Presidents, celebs--who can influence votes and tell everyone else to vote for us.

This way, you have an answer to "Says who?"

Startups should be doing the same thing.  Everyone should have a list of 25-50 people or groups that would be key endorsers.  It's one thing for someone to say they bought your product, but if you can get them on message, talking about you in their own blog posts or interviews, that's ideal. 

You can just e-mail around and ask, but the most surefire way to do this is the old fashioned power lunch/power smoothie/office visit--i.e. time spent face to face.  It's slow and it's plodding, but if you can sit with someone and convince them to get behind what you're doing, they're going to feel more special, more invested, and you'll get more of your message across, versus just asking for a Retweet.

4) Campaigns are tenacious.  

Polls may only come out weekly, but campaigns act as if every single day is a battle in the war for human attention.  The moment a story comes out, the candidate spin machine is all over it.  They never miss an opportunity to have their people commenting on TV or in the news and that's the pace your message needs to be closer to.

Every single time a piece of press comes out about your space and you're not mentioned in it is a missed opportunity--and you better be all over that reporter, fixing that mistake, inviting them to see what you have going on, etc.

5) Campaigns run events.

If you can't find enough opportunities to share your message, you need to create some of your own.  Hosting discussions, demos, dinners will be well worth the cost if you can get the right people there and in numbers--or if you can create content out of it.

Bonus:

Is it not obvious that video is the killer medium this year?  How much video is your startup creating?  Seems to be working for the candidates this year, isn't it?  Every single underemployed video creator is a startup missing an opportunity.  

How to Make Time

There is always more to do.

Right now, I have about 1000 unread e-mails in my inbox and I have a bunch of personal errands and projects around the house that I've been unable to get to.  

One of the hardest things to learn is that if I don't get to all the e-mails, that's ok.  You can't live your life in your inbox.

You have to put your personal priorities into your schedule or else other people will put theirs on yours.  Each week, I take another look at my calendar...  Did anything get on there that shouldn't be on there.  I'll cancel if I have to.  

I put in the things in my personal life that make me happy--bike rides to the beach to catch the sunset, kayak volunteering, softball, seeing my family--and work my job around them.  That includes my health--working out and sleep.  

Each week, I try to maximize the amount of time I spend doing things I look forward to, and minimize things done that I don't--things I accepted out of a misplaced sense of obligation or because someone else wants me to, even though I don't.  

I'm a solo General Partner with no partner meetings.  I don't take any meetings with founders where I don't think I can realistically get to a yes--and that means no quick 20 minute meetings.  Small things and quick favors add up.  

I don't do "office hours" at any accelerators--instead opting for a full meeting the one or two  companies (if there is even one) that I really get excited about.  You can't spend full time attention on things you're half interested in. 

I don't do panel prep calls.  If you asked me to speak on a panel, just tell me how you want the narrative to work and you run the panel.  I know what to say because if I didn't, you wouldn't have asked me on.  I'm happy to contribute two hours to be there, travel inclusive, but not two and a half or three because of the stupid prep call.  Volunteering your time shouldn't cost you extra time.

I overindex for groups I can actively curate.  Instead of going to happy hours sponsored by various vendors, I run one or two dinners per month where I can invite the attendees or get recommendations on who I should meet.

Synergies are important.  The more you spend time with people who share interests with you, or where you can make your interests overlap, the more you'll get out of each moment.

It's not a perfect system, but it gets a lot more out of the clock than average.

Punching Above Your Weight as a Founder: Why I invested in Bizly

I'm a founder.

Sure, I'm an investor, too, but I started Brooklyn Bridge Ventures, the firm I invest out of.  That means that in addition to thinking about what kinds of investments I'm going to make, I need to think about where I'm going to work, payroll, business cards, all that stuff.  

As we've seen, the "business stack" of a variety of services entrepreneurs run on everyday has changed dramatically over the last few years.  Google Apps enabled e-mail on demand without a server, Uber enables transportation on demand, and WeWork offers space on demand.

The reason why WeWork became so successful was because they realized that space wasn't just about space.  It was about support--how could they make your work life easier?  That meant over-investing in technology to improve convenience and connect their members.  

In this way, space is something more than just a room with chairs and a table.

Founders know that space needs to be something more when they interact with clients and customers, when they onboard people, and when they focus on culture through offsites and events.  It's not just about people in a room, but a particular environment they want to create.  Just last week, I had a meeting with my Limited Partners at the Highline Hotel--a beautiful building that used to be part of a seminary built in the early 1800's.  The room was eclectic and cool, and afterwards I adjourned to its beautiful outdoor courtyard to meet up with a potential new investor that I had invested to come to the meeting.  

It was exactly the kind of vibe I wanted.  High quality, but interesting and comfortable.  

And yes, I closed that investor.  I also closed on a seriously great sandwich at the hotel bar.  The food their is excellent.  

I got the space through Bizly, a company that I invested in that just launched to the public today.  Bizly takes advantage of the vast supply of conference space in some of the best and coolest designed hotels in the world, as well as the top notch staffs that run them.

With a Bizly room, you get all the benefits of doing your meetings in a hotel--food and beverage service, someone to help you with A/V, and the ability to hit up a lobby bar or restaurant before or after--without all the hassle.  No faxing, phone calls or contracts required.

Businesspeople know how important all these amenities can be, because it's more than just a room that closes a deal or that inspires a team to come up with a new insight at an offsite.  

I'm excited to work with Ron Shah on this company and it's a testament to the kind of long term relationships that have building the deal flow pipeline at Brooklyn Bridge Ventures.  I was introduced to Ron almost three years ago by one of my investors as someone I should invite to my annual Shake Shack party.  He was an investor at his own firm at the time--a fund that had a lot of international LPs.  He had a lot of insight into the business travel market from the perspective of a small fund trying to impress a lot of big names--and after a year plus of talking with him through various iterations of the business, I decided to back what became Bizly.  

It just makes sense--take advantage of the best existing supply without the overhead of needing to own or rent that supply yourself.  

I'm excited to see it come to fruition and I'll offer up a discount code.  Use "BBV" and get $25 towards a very cool meeting space at Bizly.

 

I love Donald Trump voters.

I do.  

And you should, too, no matter who you're voting for.

Because that's the only choice... Cory Booker is right.  

Love your neighbor.  That's step one.

Calling them stupid, racist, or anything else isn't going to change their minds.  It's only going to reenforce the very reasons why they're voting for Trump in the first place.

They've been left out by nearly every politician they've ever come across.  They've fought for our country and they're now out of work.  They've worked hard to instill a set of values in their families and they see a world where those values are changing rapidly.  

They fear for their safety--and for anyone who hasn't turned off the news in disgust, wouldn't you, too?

Sometimes I think that's the real enemy, by the way...   Not Trump, not Hillary, but the fucking television. 

Do I really need to know about every single time someone gets killed in a terrible way in the world?  I hate the news for making me think of the world as a terrible place--and making money off of it.

You want to hate someone?  Hate CNN for profiting off our fear.  

Some of Trump's supporters align their values with what Trump talks about, but a great many simply do not feel comfortable voting for Hillary Clinton--or they don't like Bill Clinton.  

They're disgusted by Bill's extramarital affairs and his behavior in the White House.  I can respect that--but I would respect it more if they held Donald Trump to the same standard.  

I love the fact that they feel a strong sense of moral obligation and that this election for them is about trust.

They don't like hearing about lying, about e-mails, about cover-ups.  I wonder what they think when they hear that Trump won't show us what's on his tax return?  I have to imagine that makes them upset--because that's the kind of covering up they don't like about Hillary.

For once, they just want someone elected to come clean and be honest.  I respect that.

And it is because I do care about *all* of the people in this country that it made me sick to listen to Donald Trump speak at the RNC last week--because I knew that his supporters were being lied to.

You may have worked in a *real* job--building something--not something ridiculous like I do where I invest rich people's money to try and find the next Facebook.  I get that probably shouldn't be a job and you might not respect me for it.  Sometimes, I don't believe it myself that I get paid to do that.

You toiled hard on a line making the very things I use everyday and then, one day, your plant closed.  Or, maybe you worked in one of those places that collapsed when the town's major employer picked up shop and moved away.

Foreign countries and executives looking after their bottom line "stole" your economic security and that of your friends, family, and neighbors.

So when Trump says he's going to bring those jobs back, that sounds great.  I get it.

Only... it's never going to happen.  That's just not the way the world works.  

The stock market pressures companies to look after only their bottom line, our current capitalist, public market system makes it impossible for corporate CEOs to look after anything different.  

They get fired when the stock goes down.

If you don't like capitalism--well, that's a different story.  We could go with socialism, but I'm pretty sure you don't want that either.  

And in fact, since the 1970's, that kind of bottom line thinking is pretty much why you've been getting screwed as a middle class.  Someone came up with the notion that the point of a company wasn't to employ people or care about the community--it was to make its owner's money.

It's not China's fault or trade agreements.  Those are just the *effects* of this kind of thinking.  They're not the cause.  You were getting screwed long before anyone signed any kind of trade agreement.  Your wages haven't been going up for a long, long time.  You were simply being screwed slowly.  

Your plant closing just made it more obvious.

You know what else screwed you?  Technology.

We make machines that allow companies to do more with less.  It happened in the 1800's with the industrial revolution.  It happened when we built farm machines.  

Here's a scary thing: It sure as hell is going to happen to the trucking industry.  

If you drive a truck for a living, you are going to get replaced by a machine sometime in the next twenty years--because that's just how fucking crazy good technology has become.  They can make robots who beat humans in chess, and now they make 'em better drivers, because they don't need sleep and they're always looking in every direction at all times.  

Deny it all you want or hate me for it, but it's going to happen.

That's not the fault of the Democrats or Republicans or China or anyone else.

The only solution is for you to get help--for someone to reach out and say "Hey, we care about you and your lost job, so we're going train you to make those robots or run some other kind of thing--to be a drone pilot or help rebuild our crumbling infrastructure or some such thing."

Who knows what the jobs of the future will be like.

Whatever it is, you and millions of other people are going to need someone to care about you.

The Republican party isn't the party of that kind of care.  They'll treat you like you're lazy or don't want to work--that you should be able to just "find a job" if you're able.  That's been the party platform for years--everyone for himself.

I have to imagine you're voting for Trump because you're pissed off the way this country has worked or not worked for you--and that you feel like you're getting the short end of the stick.

So do you really want to elect a man that made firing someone--telling them they can no longer work--into *entertainment*?

If you've ever been let go at a job--if you ever thought your boss took the least bit of pleasure in letting you go, in telling you that you could no longer support your family--wouldn't you think of them as the sickest most vile human being on the planet?  

You'd hate them.

Yet, that's exactly what Donald Trump has made a career of doing--exploiting the bankruptcy system, pulling millions of dollars out of all his companies while they fold time and time again.

It's the saddest thing in the world to hear these stories of small business people just like you who were told to accept pennies on the dollar for their hard work for Donald Trump's companies or to try to sue him in court.  

He plays bankruptcy like it's a game.  He thinks laying people off is a game to be played and he's very good at it.

I don't wish being fired on anyone.  It's nothing to joke about and nothing to make into entertainment.

What I want you to experience, and what everyone should experience, is hope.  I have to imagine that's what you want for your kids, too.

Hope motivates.  It inspires.

Can you honestly say that the Republican National Convention made you and your family hopeful?  Did you think of the world as a place you wanted to live in?

There is a reality in the world that probably isn't as good as the Democrats painted it to be, but I know it isn't as bad as the Republicans are making it out to be either.  If future generations are even going to bother to try to make the world a better place--they have to be hopeful about it.  

They have to want to go into it and reach out to it.

No one is going to solve the problems in the Middle East without learning a little Arabic--and if the idea of your kids learning Arabic in schools freaks you out, I totally get it.  

But, I'm sorry, the bomb thing isn't working.  

The Middle East has been blown up so many times we've lost count.  We need someone to figure out smart solutions, not just assume that blowing people up fixes everything.

That's what religious extremists want to do to us!!

Ever stop to think that maybe had anyone loved or cared about any of these kids willing to blow themselves up and just talked them off the ledge we could change their minds?

Isn't that the definition of stupidity?  Doing the same thing over and over again and expecting a different result?

The world isn't made better with locks and walls.

You know who locks keep out?  Honest people.

Bad people will do what they'll do.  They can't be eliminated or destroyed.  Evil will always exist.  We've never ever made it go away--but we've created a lot more of it by following those who told us they could.  

That's been our biggest downfall, actually--following people who told us they were going to beat the bad guy and that we should suspend our civil liberties to do so.

Don't believe a guy that he'll protect your Constitutional right to own a gun when he's willing to violate someone else's right to free speech by suing the heck out of them if he doesn't like them.  

When you start fucking with the Constitution, everything is game.  Everything.  

July 4th is my favorite holiday.  I love fireworks and summer and I like seeing all the flags.  I love this country.  I like seeing us run over other people in the Olympics, and I can watch Rocky IV over and over again, because I grew up in a time where it was cool to beat the Russian guy.

I grew up liking when the military wins.  I was in junior high when I remember being pissed off that Bush wouldn't let Stormin' Norman go all the way to Baghdad to take out Saddam. 

I was also a kid, and the world isn't a game anymore.  

What sucks the most about the world is that it's a lot more complex than winning or losing.  

Anyone who says otherwise is treating you like a child--and that pisses me off.  

Anyone who says it's all about law and order and blowing people up who want to kill us doesn't understand that you can't blow a bunch of people up without making someone hate you.   So you think you can blow every last ISIS member up--but then some other nutball riles up a group to gain power by telling them look at all the devastation the US caused.  And they'll believe it, because their lives will suck.  Extremists are desperate and hopeless.  

Not all of them will turn to violence, but that's the nature of violence today.  You don't need armies.  You just need to push one or two people over the edge.  You can't stop that.  It sucks, but you'll never snuff out every single last extremist with a conventional army.

It only takes one person to show up in Times Square with a bomb strapped to themselves to give CNN something to make money off again.

But you know who *is* going to stop those people?  

That kid who bothered to learn Arabic--or who grew up speaking it after his family immigrated here, who loves this country because we let his family escape the shit hole situation he came from in a Syrian civil war.  

Anyone who thinks it's easy to find solutions to terrorism or the economy is treating you like you're stupid.  They think nothing of you and they're willing to tell you anything to get the power that comes with your vote.

I care enough about you to say that, even if you don't agree.