I've known Hunter Walk for almost a decade. He found me through my blog and I didn't think he was real. Hunter Walk can't be any blog commenters real name, can it?
Turns out that not only is he real, but he's one of the most genuine, thoughtful, and egoless people I've met in the startup world--a real breath of fresh air. I look forward to connecting with him when he's in NYC and when I head out his way. He approached me recently with an idea for cross interviewing each other and I thought it was a good way to have my writing be a little more collaborative with my audience. I wasn't sure whether his answers would wind up here or vice versa, but when I thought about it, it turned out I was pretty adamant that my blog is for my voice. So, if you want to read what I wanted to know about Hunter, you can check it my interview of him here, on his blog.
I liked this exercise so much that I think I'd really like to make #MondayMailbag a tradition with other people. I don't know what the criteria will be or how we'll work it out, but maybe we could just start with a Twitter hashtag and go from there. What questions do you want me to answer next Monday?
1. BBV has talked proudly about its large number of female founders. When you think back to your time at USV, FRC and BBV, can you identify a time you passed on a founder because of a blind spot or unconscious bias you possessed at the time and if so, what did you do going forward to not make the mistake again?
I think other people have talked more about the fact that I've funded female founders than I have. I talk proudly about all my founders, but not necessarily because they're female. I'm just trying to invest in the best opportunities.
There are two parts to regretting a pass. One is passing for the wrong reasons and the other is having it turn out to be a missed financial gain. Normally, unless you realize the latter occurred, you don't think much about your passes. Maybe I passed on someone because they're kind of quiet and I didn't feel like they could be a public champion for their business--and I could have been wrong about that, or wrong about quiet people in general, but if they failed for some other reason, I wouldn't see my bias.
We all have biases--and not all bias is bad. I'm probably biased against just out of school hackers who think that just because they built a thing, they're going to disrupt an industry they don't care about understanding. Am I wrong to have that? Perhaps. Do I want to change that? I'm not sure because I don't know if I would ever get along with someone who doesn't at least appreciate the way something works now and why it has worked that way for so long, even if you want to change it.
I can definitely think of a few people I met with and said, "Well, that person was kind of a jerk" or they just had a bad personality--and they went on to build seemingly successful businesses. I'm not sure I think of that as a "mistake" to be fixed.
In short, you need to be able to get along with a founder--and if there are people types you don't jive with, you need to make sure it's not just because they're different than you, but because they genuinely lack the values you see as important. I think I've been good about that so far.
2. You've been in VC long enough to see lots of different funds, partners and deals. Do you think the average investor is a generally ethical and collaborative person, or is this an industry of sharp elbows and grey areas?
I think humans are generally programed to look out for themselves first. They don't intentionally seek to harm others, but they're not inclined to do you any favors either. That doesn't make them unethical, though. I'd say there's a lot of "me first" and a lot of it is predictable, with money as the main motivator. I don't, however, see a lot of unethical behavior--but maybe that's because of the answer to the above question of trying not to work with jerks. You get a lot of choice as a VC as to who you want to spend your time with.
3. Five years from now, will we have more, fewer or the same number of seed funds here in the US. I think the guys at First Republic Bank counted nearly 200 sub $100m funds (not all necessarily seed).
There are two types of seed investors: people who are doing it as a stepping stone to doing something bigger and people who actually like doing seed. Many investors start out doing seed and move up the ladder in terms of assets under management. Few stay down here, for a few reasons. There aren't a lot of fees, so you really don't get much in the way of current income and nice offices, or non-partner help. You wind up working really hard for not a lot of near term cash. That's just not attractive to most people--so they'll move up. Some other people just won't make it.
What I hope to see is the creation of new Series A investors who are willing to do the old school Series A deals of $3-5 million dollars. I fear that in the race to show that your companies can raise $20mm Series A's, we're mistaking good ideas for big ideas, and people are raising bigger and bigger funds off of valuations inflated by big funding rounds.
Some companies have a natural terminal exit value of $250mm and we should all be able to make darn good money off of that--and that means financing them responsibly, with reasonable expectations.
4. I think we originally connected via your blog - it's great and you've been one of the longest running VC bloggers (as far as I can recall). Who are some of the other investors that you think should be mentioned among the best VC bloggers but aren't as well known?
Thanks! It's been over 11 years now! Hard to believe.
I'll be honest, I don't read too many VC blogs with much loyalty anymore--but I think that Mattermark is doing wonders for under the radar blogs with their newsletter. Medium is also a big part of the resurgence of VC blogging--because now you don't worry too much about updating regularly. Your site doesn't look barren if you haven't posted on Medium in a while.
What I enjoy much more is Instagram. Blogging is a great place to find best practices and I feel fortunate that I have a network where I can go straight to the source and talk to people 1:1. It isn't a good place to get to know people, however. That's where Instagram comes in. I wish IG had better discovery tools because I really want to get to know the people behind the best practices--the dad, the mom, the cyclist, and not necessarily the 5 tips for growing MRR.
5. Are there existing larger VC funds that you'd consider joining, or are you BBV for life? (Don't have to name specific funds - just whether there are circumstances that would cause you to join one)
The only way I'd ever consider joining another fund is in retirement mode--to mentor other VCs, far far in the future when I've learned a lot more than I know now. I think that's something that's really lacking in the VC world. There are accelerators for companies, which can be especially helpful to first time founders, but what if you're a VC raising a first time fund. There's literally nothing. There's next to no content available to help you think about fund economics in depth. There's no where to find interested and willing VCs at the other end of their career willing to help you think about issues and opportunities. I'd be very interested in doing something like that later on.
For now, I love the current model. I have zero interest in firm building. I'm not a great manager or delegator (but I'm vastly improved on the latter as of recently) and it's not clear to me that VC firm capability scales with the number of partners. Just like how raising too much money can be a rabbit hole for startups, the same goes for VCs. If you add partners, you have to raise more, which means you can only do certain deals at certain stages, which also means there's less value add because the companies are more mature. It's a slippery slope. I'd rather stick to early, impactful, and local.