Startup Milestones and Broken Bones

Startup Milestones and Broken Bones

Let me take you back to a time in my startup, Zinch, to an afternoon that was almost typical.  Change was in the air as the Utah autumn shifted leaves from green to bright reds and yellows–and so, too, our startup was a-changin’…  We had outgrown our office and had hired more sales people.  They brought with them new competitive fire, and, on this day, aggressive ambitions took an unexpected turn for the worse, as the office expansion had unintentionally created a struggle over who got what in the new space.   In the early days of startupdom, you learn to give just enough guidance to your salespeople and then let them have at it. What this meant for the team vying for the best desk space that day was a head to head match at arm wrestling. I was in a neighboring office when, after a few whoops and hollers, I heard a distinct “pop!”  I thought someone had punched a wall.  As I entered the room, I saw one of the arm wrestlers on the ground, his right arm hanging limply at an odd angle. His opponent (let’s call him the ‘arm breaker’) stood dumbfounded, trying to process what just happened.  A broken arm bone was what just happened!  A few hours and an ER trip later, Lance’s arm was declared to have a spiral break at the bicep.  Unbelievable!  To this day, it’s still unbelievable! Just like moving into the office and expanding the sales team created a momentous (and memorable) milestone, startups experience notable transitions.  One of those is summiting the $1 million mark of annual...
Why You Need Those Willing to Block for Your Startup

Why You Need Those Willing to Block for Your Startup

After the local parade of friends, family, and all those rah-rah’ing your startup, comes the reality that there are many more who would rather you not enter the race. What’s more, time is your enemy, assuming you require money to live. But since you started, and certainly once you start making some noise in that race, both the incumbents and time are coming after you… “I’d never been manhandled… and the physical power and swiftness of the attack stunned me.” Last year my 11-year old chose to do her U.S. history report on one of our nation’s heroes, Kathrine Switzer. I got the chills every time she would practice reciting her report in our home. If you’re fuzzy on the name, then tune in, it’s quite the story: Kathrine was the first woman to ever run in and complete the Boston Marathon. She had registered for the 1967 race as “K. V. Switzer,” in a group of 3 male friends, after checking both the rule book and the entry form to find nothing about gender. From the initial milling before the race with the other runners until mile four, she was received amicably by the officials, spectators and other runners. But then came a dramatic near-end to her race, which she weathered thanks to her 235-pound ex-All American football player boyfriend. I’ll share this part of the story through her own words, below. As for the marathon, she eventually completed it. Since then, Kathrine’s pioneering example transformed the sport of running, from the Boston Marathon which accepted women officially the year after her race, to the Olympic Committee, which...
Back to the Future in VC:  A Conversation with a16z’s Mark Cranney

Back to the Future in VC: A Conversation with a16z’s Mark Cranney

Andreesen Horowitz (a16z for short) has accomplished what few can claim:  a meteoric rise to the apex of venture capital.  To put it in a context many of us can relate to—it’s as if a new American university had been created less than a decade ago and in that short time is now competing head to head with Harvard, Yale and Stanford.  Shouldn’t it be impossible to attract the same caliber of talent as the firmly established industry juggernauts after only a few years?  a16z has approached venture capital so differently that they’ve fundamentally altered the relationship between entrepreneurs and VCs. I’m reminded of a snippet from the documentary “Something Ventured,” (a great documentary for the next time you are flipping through Netflix trying to find something worthwhile to watch) from the early days of venture capital,  where Arthur Rock is working with a team he has backed… a time when VCs were nearly indistinguishable from full-time business operators, and when they meaningfully moved the needle of the businesses they backed. Recently I had the pleasure of getting to know one of a16z’s operating partners, Mark Cranney, who shared with me one aspect of the firm’s model: augmenting the sales of its portfolio companies.  I was captivated, and asked Mark if I could bring some of our Peak Ventures portfolio companies to a16z’s Go-to-Market Bootcamp (a regular event that they put on for their portfolio companies’ leadership teams), and he graciously welcomed us to attend.  That full-day event was incredible, and so obviously useful to the teams who attended.  It inspired me to share the experience with you all...
We’re all Chicanos on the Train

We’re all Chicanos on the Train

At dinner several years ago with long-time friends, I dug into brick-oven fired pizza while we spoke about ethnic backgrounds. These were not friends who I’d just met or thought lightly of. They were good friends, people who contributed to our community, and who crossed paths in schools and churches. I identified with them, so you can imagine my confusion when one of them turned to me and asked: “So Sid, do you get offended when someone calls you Mexican?” My instinctive response was simple, but wrong on so many levels; and because of this, it has stayed with me these many years. Let me now share with you how I responded and how I think we all share a common card, and motivating force, as minorities of one type or another. My instinctive response My response was as bad as the question. I muttered, “No,” and then changed the subject. In doing so, I validated the notion that calling someone what they are can inherently be a bad thing. And, as it relates to my ethnicity, I perpetuated an existing negative stereotype. I moved to Utah when I was 4 years old–old enough to remember our orange trees in the backyard of our home in Whittier, California, and old enough to remember shying from my ethnicity as I acclimated to Utah. Technically (and I now have an ancestry DNA test that can show you all the beautiful detail) I’m ½ Mexican, ¼ Dutch, and ¼ German. My parents split when I was still young and I was raised by my mom, who hails from the Mexican side. And...
My Journey from Entrepreneur to VC: a Different Kind of High

My Journey from Entrepreneur to VC: a Different Kind of High

Checking my phone as I boarded a long international flight back to the US, I noticed a flurry of LinkedIn notifications congratulating me on my 2-year anniversary at Peak Ventures.   A rush of emotions hit me when I saw those notifications as I reflected on this path in venture capital, my transition from entrepreneur to investor, and what I’ve learned in these few years. Transition As an entrepreneur, I assumed that venture capital, though different, would have some of the same highs—and maybe even more of them on account of being involved with many companies instead of just one.  But although it’s been exhilarating in its own right, venture investing is a different high—more moderate.  As an entrepreneur, you experience higher highs and lower lows.  Everything rides on your business’s success– financially, emotionally and otherwise.  When things look bleak, desperation swoops down to grasp you in its painful claws.  And so too, when execution and opportunity align, exhilaration lifts you up to the thrill of the highest of highs. Venture capital is more like second-hand smoke.  Don’t get me wrong, I get buzzed with excitement every day in my line of work from the challenge-driven passions of the entrepreneurs we back (and in many ways I appreciate that I’m not a user of the entrepreneurial drug anymore)—but I’ve had to reset my own expectations of how I define success and feel joy.  It’s like transitioning from being the athlete on the court to coaching my 8 year-old’s team.  Hey now, don’t misunderstand and think that I’m calling any founders children… it’s just that I’ve experienced withdrawals from missing the...
Interesting Trends in Angel Investing

Interesting Trends in Angel Investing

“Tell me about your cap table?” I asked the Founder of an early stage startup. He was clearly passionate about his business, and had assembled a top-notch team to help him achieve his ambitious vision. But the grit and determination that had helped him overcome the challenges of his current and former startups seemed to falter a bit as he considered his response. He had a dirty cap table and he knew it. With some reservation he said, “Our initial angel investors own 60% of the company. I have 35%, and the rest is split up between the team.” He then went on to explain that their aggressive valuation was based on the growth since the last round of angel investment, in which the above-market revenue multiple the angels had chosen set the precedent. I soon found out that this team had struggled to raise money from the other venture capital firms with which we like to syndicate—because they, too, were dissuaded from the conditions that the angel investors had created: small runway, fragmented cap table, high valuation and little strategic support. He described with some frustration how he felt stuck, and that his ‘angels’ no longer fit the heavenly metaphor, but rather the situation felt more like hell. Compare and contrast this situation with a scenario that has become familiar because of it’s frequency within our portfolio of Peak Ventures-backed companies, in which an angel investor known to our team (and often an LP in our fund) introduces us to the founders of a company that he or she has backed (usually at an appropriate valuation for the...
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