The funny thing is, we're sitting in the back seeing which stories can we tell and which ones are too secret?
Because for every Bronco's like an iceberg, for every story where you hear how he saved the day, there's a bunch where you can never tell how he saved the day.
Have you ever seen Pulp Fiction?
He's cleaned a lot of brains off the back windows of cars.
He laughs nervously but does not contradict me.
So Ron, and Ron, like officially Ron is SV Angel, right?
You are the limited partner or something like that of SV Angel.
Yeah, I'm not a managing partner.
David Lee's the managing partner because I don't like being a fiduciary.
I am just the largest investor.
But officially, Ron Conway doesn't invest in your company, or SV Angel invests in your company.
So if you ever see that in a cap table, that's Ron Coe.
So how many startups have you funded now?
Since 1994, about 650, 1994.
How many of you were not born yet in 1994?
Including, can you name some of the more successful ones?
Ask Jeeves was the first big liquidity event that we had.
Google, Facebook, Twitter, PayPal, Pinterest.
Okay, you're doing pretty well.
And then the YC companies, Airbnb and Dropbox.
The YC companies that are already getting to very big scale.
How did you get into this?
You started out as a founder yourself, right?
Back when startups made like computers.
Even though I don't invest in hardware today, the company that I co-founded was Alto's computer back in the late 70s.
And we ended up taking that company public in 1982.
And my experience at Altos plus two other startups that I co-founded is what gives me such respect for what entrepreneurs go through.
The theme all day is that, hey, it's not easy.
I know that because I did it.
It was even harder then in a lot of ways.
Like raising money, the stories.
Yes, back in the late seventies in order to get venture capital, you had to have high growth and be profitable.
If you weren't, you didn't even qualify.
So why did people take venture capital as they were already profitable and growing fast?
Well, in the case of Altos, it was a hardware company.
So we had a lot of cost of goods and marketing.
And so we wanted to build a war chest to keep building the business.
OK, so that fact our VC was Don Valentine from Sequoia, who is really I think the patron saint of venture capital patron.
What's changed about start-ups since then?
Well, I think it's... I'd rather talk about what's not changed.
Actually, that was going to be my next question.
Because what's not changed is what Jessica talked about, which is you have to have determination and conviction.
What has changed is in the workplace, people drink less.
That's not what I thought you were going to say.
In the back of my mind, I've been saying, hey, wait a minute, I want to answer the question about what has changed.
At Altos, we had a CFO who was in her 60s.
And at five o'clock every day, she would wheel around
the booze cart, everyone would have a drink, chit chat for a little bit, it wasn't even a happy hour, it was a happy ten minutes.
But then it motivated everyone to stay till nine or ten o'clock at night.
Now our motto was work hard and play hard.
We actually, we did it via multitasking.
I think the startups today know how to segment a little better and they have happy hour on a Friday.
What else has changed besides drinking less?
Well, I think what's not changed is the fact that once you have to focus on growth, back in the hardware days you didn't have to focus, in my opinion, on product or consumer satisfaction as much.
Yeah, it was more like, you know, ship, ship, ship, and get it out, and if it doesn't work, take it back and fix it.
Because hardware was so hard to ship that if you could ship at all, that was consumer satisfaction.
Customers were happy just to get it.
And then if it didn't work, we had this big RMA department, return material authorizations.
But today what's changed, and now, well SV Angel and the best decision I ever made in 1994 was only to invest in internet software.
So I think hardware scarred me.
But that was the best decision I ever made is that in 94, thinking this thing called the Internet is going to be really disruptive.
But back then, like 1994, it probably meant the Internet, not the web.
Like the web sort of existed, but had you heard of it when you decided to go into Internet investing?
Well, back in 1994... Were you investing in like FTP and emailing?
It would be more like people would say TCP IP as often as they would say the internet.
And I remember it as TCP IP at the time.
And people would talk about email, but they'd have to explain what email was.
It was this protocol on TCP IP.
So you sort of didn't get in at the ground floor of Internet investing.
You had to go up to get to the ground floor.
Slowly went up the stairs to the first floor.
That was a really good decision, it turns out, to get into Internet investing in 1994.
But like, how did you do that?
Well, I was in co-investing with Ben Rosen at the time.
After founding a couple of companies, I discovered, because I started dabbling in angel investing, that I really enjoyed mentoring entrepreneurs more than being the entrepreneur myself.
So in 94 is when I sold my second company and went home and told my wife, hey, I found a new job.
And she said, I didn't know you were looking.
And I said, yeah, I'm going to do this angel investing for the rest of my life.
What did she think of that?
Did she know what she was getting into?
She's always thought I was crazy, so she thinks I'm crazy today.
But I sat with Ben Rosen, who is then the chairman of Compaq.
Ben lives in New York, and we said,
Innovation is all about growth.
So we said, let's just find a sector that's growing like crazy or is going to grow like crazy and be disruptive, because innovation is disruptive.
And we said, hey, let's just throw all in on the internet.
So our only rule is internet software.
And sitting here today, still, only internet software.
Now, the market's gotten huge.
I still think we're in the infancy on the Internet, though.
I've been saying this since 1994.
I believe it more than ever.
Just add a little touch of e-commerce on top of the Internet.
And you're talking about, you know, an opportunity that's as big as all the internet today, especially with Facebook and Open Graph, helping companies go find their customers.
Well probably, in fact I'll quote the monetization guy at Twitter.
I won't even take the risk of misquoting.
But the monetization guy at Twitter told me a couple of weeks ago, he goes, hey, Twitter's on a tear now.
Like Google and Facebook, once they get destroyed, Twitter's got a really nice growth rate now.
It took a while, more than normal.
Revenue growth, you mean?
This is about revenue growth.
but will never grow like Pinterest was once they decide to monetize, because they will be an e-commerce engine like never before.
And there'll be many other companies like that that take advantage of e-commerce.
Yeah, I couldn't be more.
You agree with Ben Horowitz.
There's still stuff left to invent.
So what are the biggest misses you've had?
Can you remember some big ones you missed?
This is in 1998 and 1999 when the bubble was starting to take effect.
And I thought $30 million valuation for SalesForrest.com was a little too high.
Pandora, I had just gotten out of Napster, finally had to declare bankruptcy because of all the egos in the VC world and in the music world.
I don't think it's just egos in the music world.
And so I was hedging on the music space.
So for that reason I didn't invest in Pandora.
Palantir could have invested there, didn't understand the size of the market.
Even though we invest in the entrepreneur first, in the case of Pandora, I made a dumb move and said, hey, I'm not sure I get how big that market is.
Kickstarter we could have invested in early as well, didn't really get what crowdsourcing was.
And look at that space today, it's the lifeblood for a lot of startups.
And we have the Jobs Act,
that takes the legal confusion out of crowd sourcing.
Do you think there's a pattern to what investors miss in general?
Not just you, but investors in general.
If founders are working on something that's good, but investors are not gonna get, what kind of things do investors not get?
Well, I think investors don't get probably the stuff
that is, you know, is the first one.
Pinterest would be an example.
Ben talked about how hard it was to raise money.
And if you look at a virtual pin board, you know, that's a brand new idea.
So I think investors, even though they like to say
I'm in venture capital, I take risk.
They look for pattern recognition, which in this business is probably a mistake.
Look at Twitter in the early days.
That was a brand new idea.
And lots of VCs turned down Twitter.
So with SV Angel... Can you tell the story of how you ended up investing in Twitter?
With SV Angel, though, we invest in the entrepreneur first.
We invest in the human being.
And all of our biggest successes is when we said, hey, wow, that's a really forward-thinking idea, but
But let's go run with it.
I love that entrepreneur.
I want to invest in every one of their companies.
So when I invest in an entrepreneur, I'm investing for life.
Unless they do something wrong, I want to invest, for example, in Sean Fanning's sixth startup, Airtime.
So for me, it's a lifelong commitment.
It makes it more interesting when you have this awesome relationship with a founder
where they know me like a book and I know them like a book so we can move fast and give each other advice.
So you had invested in Odeo, right?
Yeah, so back to Twitter.
I had invested in Odeo with Evan Williams and his team.
Jack Dorsey was part of that team.
And Odeo didn't work out.
And Odeo was in an incubator called Obvious Corp.
So it was a classical incubator who had like four or five projects going on.
Twitter was one of those other projects.
Jack was the father of the Twitter project.
And Odeo ended up shutting down.
Evan Williams was magnanimous to the investors and gave the investors their money back.
Here's an entrepreneur that felt so bad and he had made a little bit of money, not a ton of money, certainly not enough to give your money back.
He had made a little bit of money selling blogger to Google, but he felt an obligation to pay the investors back.
And I said, Ev, this is going to sit in the bank until your next one.
And the next one was Twitter.
So I invested 75K in Twitter, sight unseen, zero due diligence, because I believed in that entrepreneur.
And then I got to know Jack and look at Twitter today.
So you just, you were already signed up for Twitter.
I was free before it was born.
I was free boarded on that airplane.
That's what I call betting on.
What did you think of Twitter as an idea?
Never, never argue with the metrics.
It wasn't long before Twitter's growth rate on users and numbers of tweets was straight up.
They're just now revenues going to catch up with it.
It's going to be an awesome company.
But I never argue with growth.
So whenever we see a company that's growing at 1,000% a month, and in the early days when you're successful, you will grow at 1,000% a month, because going from one user to 10 users.
If they're happy users and there's word of mouth, because Twitter never advertised, and there's good word of mouth and good PR, that's the greatest company you can get.
Look at the growth of Google.
Google was the very same way.
So Twitter, you thought basically, I don't know what this thing is, but the graph's going to be going up.
But it's growing, which means users like it, which means it's going to be successful.
There must be something there.
Because if you look at Google, Facebook, and Twitter, none of them had any idea what the monetization outcome was going to be.
All they focused on was happy users and getting lots of them quickly.
And that ends up, that's a great strategy.
That's what Ben Silverman is doing at Pinterest today.
So they just knew that there was an important problem to be solved, and they sort of had faith they would be able to make money somehow.
But now, Google's the one who probably took the biggest risk.
Because now Ben can at least look back to Google Facebook and Twitter and say, wow, they made sure they had like 100 million happy users and then they thought about monetization.
And you actually don't need to think about monetization that much.
Once you get to 100 million users, it gives you time to figure out, hey, wait a minute, there's ways to turn this into a really viable business.
So when Larry and Sergey were starting out doing Google, they really didn't know how they were going to make money.
I still have Google's first 10-page investor slide deck, and you get to the last page and it says thank you.
It does not have the spreadsheet that is usually the last page.
And they were not apologetic about it.
They said, we have awesome technology and it will lead to monetization.
And we're not going to tell you something we don't know because we don't know how we're going to monetize it.
They were very honest about it.
And that was a novel thing in those days.
That was very novel, and that's why people misconstrued that as arrogance when, in fact, Larry and Sergey were just being really bluntly honest with the investors that came in to see them.
They were like, hey, if you look at our search results and they were so much better than the prior search engine, which I was an investor in, Ask Jeeves, you know, if you can't figure that out,
I know I figured it out and I knew as chiefs really well the minute we started doing Google searches when we went in to see Larry and Sergey we we said hey can one of our guys play with the search engine while I talked to Larry and Sergey and Just because Google said we're based on relevance and page rank and
Those are really easy words today, but back in 1997, when you said, I have a search engine based on page rank, if other people like that page and they springboard off of that page, then that page must be awfully good.
So I'm going to send more people to the pages that people like.
And it was all motivated by relevancy.
So what did you think when you first met them?
Where did you first meet them?
On University Avenue, they had moved out of the garage in Menlo Park into the office.
This is where PayPal was and then I think danger after that which is now Android was in that one office.
So I actually heard about Google through David Cheritan who's a very famous Stanford professor and a founder himself.
We were at a holiday party six months before I actually met Larry and Sergey and I said hey you're on the
You're in the labs at Stanford.
Because David was an investor in our fund.
And we said to all of our investors, hey, David, you can invest in the fund, but you've got to tell us when you see something interesting.
So at this Christmas party, we were both in tuxedos, and we both hate tuxedos.
I said to get our mind off this, tell me about what's going on at Stanford.
To get your mind off the uncomfortable tuxedo.
That's how it all started.
And he said there's this company called Backrub, but they're not ready to see you yet.
But when they are, I'll introduce you.
Did he say you should invest?
This is going to be the biggest technology company of the decade?
David Sheraton was the one who said the two magic words, page rank and relevance.
And back in 1997, those were not buzzwords.
Those were like, hey, talk to me about, and then he explained what they meant.
So what did you think of Larry and Sergey when you met them?
Did they seem like they were going to be super successful?
Did you know as soon as you met them that this was like a historic company?
Well, because we've invested in 650 companies, by then it was probably 300 companies in 1997.
I had a good read on entrepreneurs and keep in mind for every company we invest in, we say no to 30.
So we see a lot of entrepreneurs.
So what I saw was two entrepreneurs that were great scientists but very, very strategic.
and determined, because they said to me, once they said, hey, we want you to invest, they said, hey, you have to go get Mike Moritz to invest in our company.
So you introduced Google to support.
Yeah, I introduced Sequoia to Google in that round.
And I said, hey, Mike Moritz is a great guy.
But what made you pick him?
Oh, well, he's on the board of Yahoo.
Because they wanted the Yahoo search deal.
Yeah, to bootstrap this company.
Because at the time, their Alta Vista was the search engine.
They had to displace an incumbent.
And they said, to do that, we've got to do two big OEM deals.
Morris will arrange that for us if we get him.
And then they were already talking to John Doar at KP.
And I didn't have to figure out the door piece.
And KP were on the board of AOL.
So they got Google and Kleiner in that first round because they were on the boards of AOL and Yahoo, respectively.
So once they got both to agree to invest, then KP didn't want Sequoia and Sequoia didn't want KP.
That took a month of wrangling.
And Larry and Sergey, you almost got the whole deal yourself.
We almost got the whole deal ourselves.
After a month, Larry and Sergey said, now after a month, Google is exploding.
You can tell that this is a technology that people are going to use for 50 years.
And Larry and Sergey got exasperated and they called me one Friday and they said, hey, the first day I went in there, I said, hey, let's just do a quick $10 million round.
And I'm an angel investor, but I knew for this technology we could round up the money and syndicate that.
And they said, hey, you said a month ago you could do that.
I said, I can do it by Monday.
And I actually believed it because then I knew even more about the company and the quality of these two founders.
But I did call KPN Sequoia and I said, hey, these founders are very determined.
They're going to do it with you or without you.
They're not bullshit artists.
They really are telling you it's over on Monday.
I said, I'm going to do the funding myself if you guys can't get it together.
This is possibly the most generous moment in the history of Silicon Valley.
You could have just not made that call, right?
Well, there's a lot of people in this venture business who would have made the call and said, oh, yeah, they're bullshitting.
They have no option except you guys.
And the next they'd know, they'd read about the round here in the press.
Your wife thinks you're crazy.
So Friday, I called John Doar and Mike Moritz.
I said, it's over on Monday.
Sure enough, it only took them just Saturday morning.
I know exactly what effect that kind of message has.
I was sitting in a Starbucks in Foster City, I don't know what street it was on.
And I got the calls, and I put, well, closed the cell phone, and I said to my wife, this is history.
The funding of the biggest company ever is going to happen.
I knew it like today is today.
Did you know it with Facebook?
That's what I wanted to say.
But I get growth, and growth is the lifeblood of innovation.
And every time I met with Zuck and Sean Parker, who was the president then, I met Facebook through Parker, because we had gone through the Napster experience together.
The growth was like this, and I said,
You can't argue with metrics.
Every time you met them, the numbers were different.
And they were way up to the right.
And they were doing all the right things.
What did you think of Mark the first time you met him?
I met him at University Cafe in Palo Alto.
It was just him and I, even though Sean Parker introduced us.
I've never told this before.
I think everyone knows Sean Parker is an edgy person.
And so I wanted to just tell Zuck, even though I had never met Zuck, hey, your president's pretty edgy, so I just want to tell you that without him here.
And Zuck, to his credit, said, yeah, I have figured that out.
Now, Zuck's 19 years old at the time.
And Parker's maybe 20 or 21, Parker's probably a few years older than Zuck.
And Zuck goes, yeah, I figured that out.
It was kind of a rocky start because it was like, oh, okay.
And Zuck was like, let's move on.
You know, what can you help Facebook do?
And one of the huge things that SV Angel does is help companies get funded.
You know, we helped Google with their funding issue.
I helped Twitter with their funding issues, especially in the benchmark round.
So did you get involved with Facebook's VC round?
So they had taken the Peter Teal money and they were getting ready to do the VC round.
So, and Sean Parker, because of Napster knew that
well, angel investors at the time, that we could really help work with all these VCs and get them to close around quickly and efficiently because the process can be really painful if you don't have forcing functions.
Did you essentially orchestrate a bidding war?
We triaged the list of about 20 VCs that we wanted to go to.
They were already talking to the Washington Post, Don Graham.
Don Graham offered a 50 million valuation.
Um, and Zuck and Parker called me when they got out of the office and they, Ron, Ron, we got a $50 million valuation from, from, uh, Don Graham.
I don't think you heard him right.
I bet she said 5 million.
I said, hurry up and get it to happen.
So in this case, I didn't need to do anything.
In that process, Jim Breyer was looking at the company and decided to offer 80 million, I think it was 80 million pre, 90 million post, which, you know, that was the rebirth of Excel right there after the bubble.
So Jim Breyer did the funding.
Was that Google's pre-money series A?
Google's free money was 75 million pre.
Do you think it was a coincidence there was a little more?
I would say it's a coincidence.
If I wanted to get Zuckerberg to take my money, I would offer him a little bit more than Google got.
Don Graham was at Facebook first, and I always felt bad that, and Don Graham was a gentleman about saying, hey, Excel is offering
30 million more than me, Excel should be your VC.
And fast forward five years, Don Graham's on the board of Facebook today, which I think is awesome, because Don Graham was a mentor to Mark Zuckerberg in the early days.
Mark went and spent two weeks at the post just following Don Graham around while the company was growing like a weed, because he wanted to see what a CEO did.
And he followed someone in the journalism business.
So what was I going to ask?
Darn, I've completely forgotten.
I was so surprised by that.
Did any VCs say no to Facebook in that round?
Are there any that just said no that is not going to work?
And I am not naming them.
I want to know privately.
Hey, this is really early days.
Did they say no because they didn't believe in the business?
Or did they say no because the price was too high?
Did not believe in the business.
Like the social network for college students is great.
Do you know incidentally what multiple you got on Google?
If you sold at the all-time high, you would get like $700 for each dollar you invested.
All-time high might be in the future.
The all-time high for Google is definitely in the future.
Do you think Larry and Sergey knew that they were going to be that big?
Which makes me think of a story.
How are we doing on time?
We've got a couple more minutes.
But this is a good story.
So Ben Horowitz showed his picture with Warren Buffett at a party at my home when he talked.
See, Ron is secretly behind everything.
At that, attending that party, along with Ben, and this party was sponsored by Angel Investors at the time, which was my fund at the time.
And we had in our yard every internet person known to man, including Sean Parker, Sean Fanning, and Larry and Sergey.
And it was in 1998, let's say.
So Google was like one-year-old Napster.
probably a year and a half old.
And the day of this party, Napster was at its all-time high.
Sean Parker has been on the cover of every major magazine in America within three weeks.
And major magazines in America don't put the same guy on the cover.
But Napster was so disruptive
they said, the hell with it, this kid's got to go on the cover.
Sean Fanning is really famous.
He is the shyest person on the earth, not a malicious bone in his body.
He had a keeper with him at the party.
Even though I knew him really well, he was like
You know, I don't like all this attention.
So Larry and Sergey say, hey, will you introduce us to Fanning?
And Google is barely known.
Probably a third of the people at this party, you would say Google and they'd say,
I've heard it, but what do they do?
So I take them up and I say to Fanning, I said this will be the biggest company on Earth someday because their search results are so accurate and so good.
And Fanning is fascinated, talks to them, shake hands.
We walk away and Larry and Sergey follow me and I go, is there somebody else you want to meet?
And they go, no, no, we have to talk to you.
They said, it is so frustrating.
We will never be famous like him.
And they were looking at me like, tell us we're right.
And I said, you guys are so wrong because you're going to make money while this poor guy fights with the record labels.
Let's not end on that note.
We'll end with the question to everybody in this audience.
Well, a lot of people in this audience probably want to know, which is, how do they get your money?
Like, what makes you want to invest in somebody?
Well, we invest in people first.
So they have to be people.
But they have to be people with personalities, with drive.
They have to be a leader because if you're going to build a big company, you have to have enough charisma to get other people to work on your team.
You've got to recruit a team.
It's been a while I was just seeing this.
And determination, what Jessica talked about.
You have to be completely fearless.
How can you tell when you meet somebody that they have these qualities?
In fact, I want to know this myself.
Well, I've been doing it so long that I can just tell, after 10 minutes, I've made up my mind.
So the SV team, you know, I have to keep saying, hey, I don't want to come across as rude, but after 10 minutes, I've decided if I like the company or not, because I'm looking at the personality of the individual.
You know, can they build a great company?
So there's like a 50, I have an algorithm in my brain that goes through like 50 traits.
But you don't have the source to invest.
I don't, I'm not, I really don't care what the company does today.
I want to invest in that entrepreneur's company like their sixth, seventh, eighth company.
It's a lifelong commitment.
I don't think other investors look at it that way.
It's not very useful advice.
Either you got it or you don't.
I'm looking for traits that are all identifiable.
Are you a good communicator?
You can tell that when you're talking to somebody.
I suppose the good news is, if the person has these traits, even if they don't think they would necessarily make a good startup founder or something like that, you'll back them while they figure it out.
Of course we will, right?
That's what's unique about SV Angel.
The other thing is product focus.
So if you look at the success of Facebook and Pinterest and Square,
These founders are focused on the product, and they're focused on the product because they know if the product's good, they're going to have a happy customer.
They care almost too much about it.
Oh, you can never care too much.
Craftsmen who are like, are obsessed with the quality that they're making.
You know, in this day and age, so much of the success is about UI.
So if you look at Ben Silverman, Jack Dorsey, and
And Zuck, they care about happy users.
And in a perfect world, they will go back in their hovel and just make their product great.
They hate coming out in public.
It takes them away from the brass ring, which is millions and millions of happy customers.
Would you still invest in highlight today?
Robert, there's no Q&A as part of this talk.
These press guys, you know.