Congratulations to the SeatMe team on the news today that the company has been acquired by Yelp. Like many entrepreneurial journeys, SeatMe started as an idea jotted on a notes app in early February of 2011. The idea was to make restaurant reservations better — both for members of the hungry public and members of the hard-working restaurant community. I loved the concept when I first met Alexander Kvamme in 2011 and enjoyed getting to know him and the team in a meaningful way, which led to Maveron investing in SeatMe’s Series A in April 2012. Alexander and his team have done an amazing job working day and night to help local restaurants and bars manage their restaurants, while also allowing customers to book reservations online. Now with SeatMe’s solution, more local restaurants and bars can provide an easy way for customers to book online reservations, enhancing the consumer experience for those who discover a great local business on Yelp.
Whether it’s getting to know founders earlier through our seed program or through core investments in startups during Series A, we are committed to passionate entrepreneurs like Alexander who are obsessively driven and strive for perfection. Congratulations to the team!
Congratulations to Grant Feek and the Tred (www.tred.com) team on their official launch and unique approach to simplifying new car purchases with the first home delivery test drive and no haggle buying service. I’m buying a car later this year and can’t wait to have the cars come to my house on the weekend, where my wife and I can drive them without having to bring our two little kids to the dealer.
I first met Grant as a Techstars mentor. I was immediately struck by his absolute obsession with changing the experience many consumers dread – the act of buying a car. The best consumer businesses are driven by extraordinarily motivated founders like Grant, entrepreneurs who are insanely driven to delight the end consumer.
In the automotive industry, you have to work within the confines of a complex distribution system and satisfy the needs of automakers and dealers, in addition to end consumers. In building the product and navigating toward launch, Grant has successfully navigated these difficult waters. Automakers love TRED as they are able to get more customers behind the wheel of their vehicles. Dealers love Tred’s conversion rates from test drives to sales are 40%, and because they’re converting more than 80% of shoppers to purchases. That’s much higher conversion and much lower leakage than other lead generators. Consumers care because Tred cuts the time in a dealership substantially and eliminates all the pressures of making car buying decisions on the showroom floor by bringing cars directly to where busy families and professionals are comfortable — on their own terms, during their schedule, and at the best possible price.
High school graduates take note: when you graduate college in four years you will face one of two paths. Depending on the choices you make, you may have multiple high paying job offers and an exciting career in your grasp. Or you may be moving back in with mom and dad as of the 42% of college graduates from the past two years working in a job that doesn’t require a college degree.
What path you take is up to you. As a venture capitalist, I see dozens of companies hiring workers with varying degrees of experience and, when I speak to CEOs about what they want in a college graduate, they all have a few common words of wisdom.
1. Think About Your Career Early. College is a time for exploration but too many college students fly blind. Companies want students with a tangible set of skills. But many students don’t know which courses of study lead to professions with job openings, good placement rates, and good wage levels.
2. Know Which Fields of Study Lead to High Potential Career Paths. Every company in our portfolio needs great software developers, great designers and a cadre of analysts who understand how to derive insight from value. You . Don’t need to choose these fields if they do not inspire you but know you are a leg up career-wise if you do.
3. Experience is as (Or More) Important Than the Classroom. Employers used to hire smart graduates and train them on the job. Today, they want employees who are ready to go on day one. Explore career options throughout college by interning at companies in potential career areas of interest. Take advantage of your college’s experiential curriculum and any courses or programs that enable you to get real exposure to the workplace.
4. Don’t Count on Grad School to Figure it Out. Two years of grad school may cost $30,000 to over $100,000 and offers a dubious return on investment. Outside of specialized fields like medicine and law, you can often avoid this investment by being more deliberate in career planning during your undergraduate years.
5. Think about augmenting your college experience with other vocational training. Businesses like Lynda.com, General Assembly, Codeacademy and CreativeLive offer the ability to learn practical skills that may not be available in the college classroom. You can major in French Literature while teaching yourself skills as wide ranging as photography, computer programming and data science through these alternative education providers.
If high schools grads could take one thing away from this article, I’d want them to walk away knowing that a college degree is not a ticket to financial prosperity and a career of your dreams. The only way to make that happen is to be deliberate in choosing a path and taking your destiny into your own hands.
Digital communications and social media have empowered consumers, whose voices can be heard loud and clear.
As has always been the case, the fate of a business is often determined by how well it generates consumer delight. However, these new platforms have provided consumers a bully pulpit like never before. Early stage companies able to react quickly to customer feedback are finding they are better suited to grow fast and outpace big, established businesses that are historically slower to move. We have seen the best of these early entrepreneurs pair an ability to foster, harness, and respond to consumer feedback with advanced technology and tools to get to product market fit and scale with far less capital than ever before.
Recently we sat down with some of Maveron’s portfolio entrepreneurs who have proven themselves particularly skilled at harnessing consumer engagement to quickly grow brands. These pieces of insight, taken together, provide a decent playbook for any entrepreneur looking to scale a business.
1. Get comfortable with internal technology and big data.
“Without data, you don’t really have a consumer business in today’s age,” says Jake Schwartz, co-founder and CEO of General Assembly, which provides working space and education to entrepreneurs. Now is the ideal time to start a consumer business, he says, because traditional barriers of entry have completely broken down. This open terrain gives entrepreneurs an opportunity to aggressively innovate around product, distribution, and marketing to build brands that resonate with consumers — and, most importantly, to mix the art of brand building with the science of data. Schwartz encourages entrepreneurs to become comfortable with their own internal technology and internal data, and use both as the central tool in making decisions.
2. Never run out of cash, and never run out of heart.
Two things that can lead to certain death for any startup are lack of cash and lack of heart, says startup veteran and PayNearMe CEO, Danny Shader. “Raise the money before you need it! Given the choice between suffering a little more dilution because you didn’t wait until the last possible value creation moment and running out of dough, I’d opt for the former and try to make sure we have at least a year’s cash in the bank before we raise money,” adding that entrepreneurs strapped for cash might possibly take terms they don’t like. When working with investors, Shader also suggests that entrepreneurs work with VC firms that “have your back and add value that goes beyond money.”
3. Create a visceral emotional brand.
The difference between a cool, new product and a big, lasting brand is outsized consumer passion, the bit of magic that makes someone love your product so much that it becomes a meaningful part of their lives and they can’t help but tell all their friends. The intersection between brand building and technology has ignited a rise in high-end online retailers over the past five years, but it takes more than an e-commerce website and social media profile to connect with consumers. Michael Preysman, founder and CEO of Everlane says, “The most important piece to building a brand is to have a very strong point of view that doesn’t exist in the market today, and that people are receptive to.” His company, Everlane, offers luxury clothing online without the added markups from manufacturers, retailers, or middlemen. If people love your products they’ll love your company.
4. The best leaders think about others before themselves.
Leaders set the culture of a company, including an ethos of thinking about others before themselves and what’s best for a business before an individual. But in the fast-paced early days of a company, balancing the many requirements of the company and team members, both professionally and personally, is often among a CEO’s hardest jobs. Iggy Fanlo, co-founder and CEO of Lively, a health and wellness startup that is helping the aging population stay connected with family and friends, says that entrepreneurs need to remember that “people don’t need a lot of you some of the time, they need a little of you all the time.”
5. Passion, then more passion, but it works both ways.
Finally, a word from me. In my 30 years working with consumer companies, I’ve worked with many highly respected entrepreneurs who have created enduring consumer businesses. During that time, whether it was Starbucks, eBay, or hopefully the next billion-dollar brand, zulily, the one commonality is passion. It sounds so simple but it isn’t. An entrepreneur and their team have to have passion and driven by a vision to seamlessly integrate their product or service into the every day lives of consumers. To do that, however, the team has to instill a sense of passion into their customers and that only happens when you obsessively focus on exceeding their expectations.
Considered one of the greatest investors of all time, Peter Lynch had a simple investment principle - “invest in what you know.” This straightforward investment philosophy helped him find good undervalued consumer-oriented stocks and achieve an annual average return of 29 percent while managing the Fidelity Magellan Fund from 1977 to 1990, which grew from $20 million to $14 billion during that time.
We appreciate Lynch’s simple, yet adaptive, investment style, which focused on the basics of good management, exceptional businesses, and quality consumer products. However, in today’s Sarbanes-Oxley world, for lots of logical reasons, investors are increasingly unable to realize this type of return or get in early enough to see that magnitude of returns. For example, a single share of Starbucks bought at the 1992 IPO is now worth almost 100x its original price. Even if one invested at Facebook’s public nadir of $50 billion in value, and it reaches $350 billion market capitalization, it would only be a 7x return.
The JOBS Act has relieved some of the restrictions that were put into place by the Sarbanes-Oxley Act, with the most notable innovation being crowdfunding. As the investment banker who had the privilege to take storied retail brands like Starbucks public, I see the crowdfunding marketplace improving upon the investment banking franchises of yesteryear by allowing retail investors to once again gain early access to high-risk growth investment opportunities.
Providing that opportunity early to investors inspired us to invest in CircleUp, a great equity-based crowdfunding site focused on consumer and retail. In our minds, CircleUp’s equity-based crowdfunding approach will become the 21st century investment banker.
Rather than shying away from what some consider to be competition, we were the first institutional investors to back Ryan Caldbeck and Rory Eakin, the co-founders of CircleUp, and embrace the value that crowdfunding can bring to early-stage startups. Two years later, CircleUp is on its way to making their vision a reality with a game-changing approach and marketplace that matches promising consumer companies with the right investors. This week, the company successfully closed new funding of $7.5 million led by Union Square Ventures and Google Ventures, with participation from my firm, Maveron. The financing marks the next step for Caldbeck and Eakin in making CircleUp the investment platform for the next generation of consumer brands. Early evidence shows that there is a good chance the next Chobani, Vitamin Water, or Under Armor will start by raising capital on CircleUp.
In his Forbes article on the one-year old “Jumpstart Our Business Startups” (JOBS) Act, Caldbeck says “Equity crowd funding is the most disruptive thing to happen to the financial services industry in a very long time.” As a former investor at consumer private equity funds, Ryan saw a hole in the market – early stage consumer businesses with great potential struggling to find capital and not a head on fit with normalized fundraising models paired with investors who couldn’t gain early access to these high quality businesses.
I couldn’t agree more. Not only is crowdfunding great for investors, but it’s even better for entrepreneurs, opening up untraditional sources of capital and creating a network previously unavailable to early stage companies. While we know as well as any the value great institutional investors can bring to the table, we also know that institutional capital is not right for every type or stage of promising business. Raising capital from individuals rather than institutions, can provide entrepreneurs with benefits such as more internal control, or more flexible liquidity timelines. Unlike investment banking, crowdfunding gives independent investors complete transparency and visibility into where other smart investors, frequently their peers, are investing. Rather than a junior banker calling dozens of institutional clients and retail investors with research and analysis on potential investment opportunities, CircleUp offers individual investors direct access to opportunities. It provides a format where they can find the relevant information, receive sample products, and connect directly with the company and management team. This new approach allows influential private investors to speak with their pocketbooks, a signal that is vastly superior to the investment banking research analyst reports in today’s hyper connected world.
Lets face it, crowdfunding is the new investment banker and, in many ways, a new important player in the venture capital ecosystem. Maveron has been one of the few VC firms that have made bets on equity crowdfunding. Just like all our investments, we’re looking for incredible entrepreneurs like Ryan and Rory and for businesses that are ready to disrupt industries, displace incumbents, and establish market leadership. We love the idea of investing behind disruptive companies like CircleUp, and relish in the fact they might end up being our competition for certain investments. With crowdfunding, more entrepreneurs with the next big idea will access capital and that’s a good thing for the entire entrepreneurial ecosystem.
Congratulations to Ryan Caldbeck and Rory Eakin, the co-founders of CircleUp, for closing new funding of $7.5 million led by Union Square Ventures and Google Ventures, with participation from Maveron. Rather than shying away from what some consider to be competition, we were the first institutional investors to invest in CircleUp and embrace the value that crowdfunding can bring to early-stage startups. The new financing marks the next step for Caldbeck and Eakin in making CircleUp the investment platform for the next generation of consumer brands and early evidence shows that there is a good chance the next Chobani, Vitamin Water, or Under Armor will start by raising capital on CircleUp.
In his Forbes article on the one-year old “Jumpstart Our Business Startups” (JOBS) Act, Caldeck says “Equity crowd funding is the most disruptive thing to happen to the financial services industry in a very long time.”
We couldn’t agree more! Congratulations to the team.
Last week, as the New York Times labeled the food industry “the next big thing in tech,” Maveron announced its latest seed investment, Panna, a young company already making big moves in transforming the way we follow recipes at home. Launched by media industry veteran and cooking enthusiast, David Ellner, Panna is the first digital cooking magazine, bringing high quality video recipes to mobile devices and allowing amateur chefs to cook and create alongside some of the world’s best and most renowned.
So why do we agree with the Times? At Maveron, we invest with the thesis that the next generation of consumer brands will harness technology to reach more people, faster, and in more meaningful, personal ways. We believe the difference between a cool product and a massive brand and business stems from fanatical consumer passion, and the ability to seamlessly improve and integrate into a user’s daily life—to be their lifeline for how they accomplish what they want to do, whether it’s book a vacation home for their family (AirBnB), share moments with their friends and family (Instagram), or purchase clothes for their children (zulily). And the more personal the more problem, the more passionate consumers become around the solution. Yet, while there are few moments more intimate than dinners prepared and shared in our own homes, technology hasn’t yet disrupted the cooking experience.
Panna takes on this challenge with a mobile app featuring beautiful videos of star chefs such as Jonathan Waxman, Rick Bayless, and Anito Lo in a format that harnesses technology to make life easier and more enjoyable for food enthusiasts through bite size step-by-step clips. It uniquely unites the editorial curation of recipes, chefs, tips, and tricks formerly only found in offline food magazines with the ease, personalization, and freedom that mobile video allows to help the amateur cook execute like a pro.
Most importantly, Panna combines the things we love most at Maveron: a standout, all-star entrepreneur uniquely positioned to take a fresh look and create disruptive models for a big, stale market. Integrating new digital solutions into old industries isn’t a new task for David—in fact, he’s been doing it his whole career and is responsible for some of the most innovative initiatives in the entertainment world from his time at Universal Music and 19 Entertainment. He has that “A” entrepreneur ability to disregard even the deepest set standards and, instead, begin with an empty canvas. “Panna started with a blank sheet of paper and the customer in mind. We have no pre-existing models and we’ve built a vehicle to transmit the recipes, passion and expertise of master chefs to the home cook through video technology.” Even better, it’s a business model we can get behind. David’s taken the hard to monetize content category and created a quickly scaling product people are already paying for, the value proposition of the mouthwatering recipes and easy to follow format deliciously clear.
We’re thrilled to welcome Panna to the Maveron family and excited to work with David to reimagine the ingredients of the cooking industry. But, first, we’re busy boasting about our homemade tarte aux pommes.
The most recent innovators in education have been companies such as Udacity, EdX and Coursera, which offer free massive open online courses (MOOCs) from top tier university professors to students globally. MOOCs have massive potential and hold the promise of disrupting the traditional university experience by offering a better education at a radically lower cost.
While these first generation open course providers hold great promise, their Achilles heel has been abysmal completion rates. These platforms target a specific type of self-driven learner, who have the patience, persistence and drive to complete a difficult online course independently. While the self-learner represents a minority of students, most students value and thrive in environments where they can collaborate with each other. Until now, learners on open course platforms who value a collaborative course experience have had to organize their own offline meetups or online groups. We believe the better solution is to build collaboration into the platform.
For this reason, we are thrilled to announce our participation in the financing of NovoEd, previously known as Venture Lab. NovoEd is a new MOOC, which was spun out of Stanford University after it launched its platform last fall and attracted over 100,000 enrolled students to its first set of classes. NovoEd’s talented CEO, Amin Saberi, is a tenured Stanford engineering professor who built the platform around the philosophy that teamwork and collaboration should be part of the learning platform and an integral element of each course. NovoEd’s approach uses team-based and cooperative learning to help students in courses including entrepreneurship, leadership, negotiations and communication. This team-based approach led to course completion percentages significantly higher than those achieved by the first generation of MOOC providers.
As part of the financing, NovoEd announced that it is expanding beyond its initial program at Stanford University, and aims to partner with other Universities to offer courses on campus and globally. Already, the online learning startup offers seven Stanford University courses to the public and 10 private courses only available for current Stanford students.
NovoEd addresses two macro trends that are fundamentally changing education. First is that student loan debt now exceeds credit card debt and continued cost inflation in higher education is unsustainable. As a result, students will inevitably take some courses online that offer credit and bring the weighted cost of education downwards. Secondly, today’s fast pace of economic change means that working adults will need to be educated multiple times through their life as their careers evolve or change. These working adults will need access to flexible and low cost online alternatives to learn new skills. NovoEd’s collaborative platform will offer both traditional college students and working adults a new and more effective way to learn. I am thrilled to invest in NovoEd and am excited about the company’s potential to help catalyze the disruption that lies ahead in the next decade in higher education.
Already, 2013’s been marked as the enterprise revolution. Angel investors and venture capitalists, many of whom have spent recent years dabbling in consumer investing, are turning to enterprise as the better investment decision and the focus of the next great wave of innovation. At Maveron, we’re happy to wish them well on their way.
While others turn their heads, we remain more certain than ever around Maveron’s core belief: that great entrepreneurs can use technology to disrupt markets and build billion-dollar consumer brands. And that a committed investment partner with experience, knowledge, and passion around this kind of company building from a business’s earliest days can make a huge difference on a brand’s journey towards ubiquity.
As part of continuously reevaluating and reinvigorating our commitment to investing in early stage consumer businesses, we are doubling down on both sector and stage with a new seed program designed to fund high potential businesses and build lasting relationships with the next generation of world-class entrepreneurs.
Consumer startups are requiring increasingly less capital to get off the ground as technology and tools evolve. The boom of crowd-funding platforms such as Angellist and Kickstarter are illustrations not only of consumer interest in innovation and desire to be a part of invention that will change our daily lives, but also that a relatively little bit of cash and an indication of market interest can be an incredible springboard for turning big ideas into tangible businesses.
However, from working with our diverse portfolio across our funds, we know that entrepreneurs need more than money to launch transformative consumer brands in today’s market. Instead, they require thoughtful partners that can provide the expertise, mentorship, access, resources, and mindshare that businesses and builders need to get great companies off the ground.
To be as valuable of a partner as we can be throughout a company’s lifecycle, we’ve designed our early-stage investment program to provide entrepreneurs with seed funding ranging from $100,000-$250,000, as reported by GeekWire. We will focus on consumer businesses with technology-enabled products and services in commerce, education and health and wellness, and partner with them to help navigate the early terrain and establish product market fit. Maveron has already completed three seed investments in 2013 and more than 15 in the last two years, including Everlane, CircleUp, CourseHero and Julep.
Julep, in fact, has become one of the fastest growing beauty brands in the U.S. and recently announced $10.3 million in Series B financing led by Andreessen Horowitz, with Maveron’s participation. The company’s unparalleled product innovation and speed-to-market, coupled with vocal social media engagement instead of traditional marketing, have enabled Julep to produce more products in an 18-month span than any other beauty company.
Through the Maveron portfolio, we’ve seen the power of a standout team, a big market, and innovative technology to change the way we engage in daily life—how we shop for our kids (Zulily), pursue education (General Assembly), protect our pets (trupanion), and make sure our parents and grandparents are safe (Lively). We look forward to our new seed program spurring increased opportunity to partner with the next wave of great entrepreneurs who will build the services, products, and platforms we soon won’t be able to live without.
In my 30 years working with consumer companies, I’ve had the privilege of working with some of the world’s most respected entrepreneurs who have created enduring consumer businesses. During that time, whether it was Starbucks, eBay or hopefully the next billion-dollar brand zulily, I have learned that when a passionate entrepreneur is obsessively driven by a vision to seamlessly integrate their product or service into the every day lives of consumers, they can accomplish anything.
Yet, great accomplishments are measured differently by different people – sometimes by respect, power or money, or by a combination of many other traits. At Maveron, we value a balanced quantitative and qualitative approach when measuring one’s success. We also recognize the media’s interest in placing a spotlight on an entrepreneur’s economic riches, which is why this year’s new record for the billionaire club reported by Forbes makes for interesting reading.
However, in all our great successes at Maveron, money has clearly been the result of creating a transformative consumer business, not the objective. So, while it’s interesting that Forbes crowned 200 more billionaires in 2013 than 2012, I was more intrigued by the distinguished list of notable consumer business newcomers, including fashion icon Tory Burch, the second youngest self-made female billionaire in America; GoPro CEO Nick Woodman; and Manoj Bhargava, the creator of 5-Hour Energy and many more. I guarantee that these entrepreneur’s new billionaire status was the byproduct of the perfect mix of enormous passion and obsessing over execution, rather than making the Forbes 400 billionaire list.
For example, starting with only a $35K loan from his mother and money raised selling seashell belts, GoPro CEO Woodman built the first camera prototypes in his bedroom with his mom’s sewing machine and a drill. He manically focused on creating an amazing product that his consumers love. Today, GoPro has become America’s fastest-growing digital imaging company. I don’t know Woodman personally, but would guess his wealth is the result of focusing his resources on what matters most: developing a groundbreaking consumer-facing product experience that ultimately led to a market leading business.
We’ve been privileged to see this same level of focus from Darrell Cavens and Mark Vadon, two highly successful dads of small children who turned to the Web like many parents to shop for merchandise, diapers and more. They couldn’t find great deals on children’s boutique brands for their kids. So, in late 2009 they created zulily. From the moment they started working out of our offices, Darrell and Mark were obsessively dedicated to not only delivering a phenomenal website with the most unique and sought after children’s boutique brands, but also to strive for perfection when it came to the overall zulily shopping experience and customer service. zulily has now rocketed to an estimated billion dollar valuation in less than three years after it launched in January of 2010 and is every day is earning the right to sell moms an even broader array of goods across new categories.
With new technology enabling consumer-facing businesses to spread their message to consumers faster than ever, there couldn’t be a better time to build the next big billion-dollar consumer business. This is why Maveron remains very bullish on investing in early stage consumer businesses. We believe the technological innovation that began transforming consumer businesses more than a decade ago, will continue apace, if not accelerate, the creation of vastly disruptive new businesses.
As entrepreneurs strive to build the next big billion dollar consumer business, just remember, your ultimate success or failure will depend on building a great team around you. That team needs to execute a vision that obsessively focuses on integrating your product or service directly into the lives of your consumers. It will not depend on technology or you joining Forbes’ billion-dollar club, but on your companies’ ability to build disruptive and defensible attributes that create emotional connectivity—a powerful psychological contract–with your end consumers.
Don’t get me wrong, there’s nothing wrong with wanting to see your name on a Forbes List. For example, I’m happy to make a case for being on this year’s Forbes Midas list; but, seeing your name in print matters far less than obsessing over delivering great value to your customers.