Altman interviews Andreesen, Conway and Parker in the ninth How to Start a Startup lecture, How to Raise Money, at Stanford University.
Conway appears at #65 on the Forbes list of VC investors. It says he ‘invented the spray-and-pray investing technique,’ but notes SV Angel’s stakes in Facebook, Twitter, Dropbox, Pinterest, Square, OpenTable, Airbnb, Practice Fusion, Zappos, Zynga and Buddy Media.
Graham interviews Conway for the Y Combinator event. He says founders must have a dedicated work ethic, get along with their co-founder, and not be afraid to make changes like laying off people who aren’t performing. Conway:
You can’t learn to be ambitious and driven.
TechCrunch reports that Twitter asked investors to keep the numbers quiet. It doesn’t state where it obtained the figures for funding and pre-money valuation, beyond hinting that an investor may have leaked them.
Conway is reported to clash with Palihapitiya over a proposal that San Francisco tax tech company wealth to offset the industry’s contribution to living costs, including a 1% equity tax on startups, and Palihapitiya’s call for Mayor Lee to resign. Conway:
They’re working to make [San Francisco] a better city and so is Mayor Ed Lee, and it is going to get better, not worse. Maybe you can donate some?
Conway tells social news channel Ozy.com that if founders can’t accurately describe their company in one minute, they are likely to lose the investor. On what not to do:
Not accurately describing your company…You’ve got to be able to describe your company – and that’s why it’s called an elevator pitch – in less than a minute.
Livingston interviews Conway about his investments, and what he thinks is the future of social apps. Conway:
I don’t know because I’m not a founder, but I’m sure people out there [in the audience] have ideas on what is the next social app, because social apps are changing the way people communicate
Graham interviews Conway about what has changed in tech. Conway:
What’s not changed…is you have to have determination, and conviction. You have to be a leader.
He says that in the Altos days, workplaces were less formal, for instance the employees would drink to motivate themselves to stay until 9 p.m.
I think the startups today know how to segment a little better
His assessment is that software companies have to deliver:
What’s not changed is the fact that you have to focus on growth. Back in the hardware days you didn’t have to focus on product or consumer satisfaction as much…Customers were happy just to get it
Arrington and Conway discuss the NSA at Disrupt 2013. Arrington talks about issues like seizing encrypted data and hacking phones:
We see what is happening with the NSA, the NSA is strong-arming these companies that are part of our ecosystem…why have you sat by for six months and not done a thing to stop this?
I absolutely agree that we have to balance national security, there was this thing called 9/11, the government’s responsibility is to protect… You have to balance that with responsibility… Obviously the events of the last 60 days with the NSAs says that there has to be a balance between national security and transparency.
He says there is a healthy debate and he is focusing on other issues – civic engagement, gun control, and immigration reform:
I’m probably not going to be the tech leader who heads that…right now immigration reform to me is probably more important
Conway writes a piece for Mashable calling for people to join the March for Immigration:
Those of us who work in the technology sector have been calling for smart immigration reform for years. In the past we’ve tried a piecemeal approach, focusing solely on visas for advanced degree foreign-born students in STEM fields because that is the heart and soul of our industry.
Today, I take a different view. I believe our focus was too narrow. Our country needs a comprehensive plan that reforms the entire system of immigration.
If the entire system is broken, it makes no sense to fix just one piece while the rest languishes.
Arrington interviews Conway, Lee, and Pokorny about where the innovations are in tech.
I would actually say in the last 12-18 months ideas are bigger, bolder, more ambitious…
Those include things like drone companies, and scientific research.
We just in the last six months have [identified] two new target sectors to invest…education and the internet of things
He says the company is looking at ‘hardware devices communicating constantly with the web’, and says SV Angel is ‘defining’ the new sector of health informatics.
The basic idea is if you think about the explosion of genomic medical information, all the medical data that is now being digitized…I think there’s now a chance to turn biology itself into a [tech sector]
I’m still bullish on consumer innovation
Conway and Winter are interviewed by Siegler at a Tech Crunch event about the Napster documentary. Conway talks about his efforts to sort out the company’s legal problems:
Technically speaking it’s still not solved…Today we have all the sharing economy companies, like ride sharing and AirbnB, and all the local authorities are acting like the record labels. You can’t stop innovation, and it amazes me that people still don’t know that.
Conway reveals that SV Angel put in about $500,000 in the early stages of the company. The investment hasn’t previously been disclosed.
Conway and Lee introduce the awards. Conway talks about the tech industry’s local engagement with politics and the national agenda:
We want to hire San Franciscans inside the tech companies in San Francisco…our agenda this year nationally is to finally pass immigration reform
Conway gives the keynote about how the internet is still getting started:
I believe that today the internet is still in its early days…for those that say this is a mature industry….I believe that the heaviest growth for all of us is ahead not behind us
He notes that a year and a half ago, ‘half of us didn’t know what Pinterest was.’ SV Angel sees the biggest opportunities in social, real-time data, big data, social commerce, collaborative consumption such as AirBNB, and mobile and payments.
Conway stops providing funds to companies in the program as the firm reduces the size of its funding to $80,000 from $150,000. Part of this is due to conflict between startup co-founders. Milner, Andreessen Horowitz, General Catalyst, and Maverick Capital continue to supply funding. Conway will still be involved in the program. Graham says his decision is likely due to SV Angel’s small size relative to the other parties providing funds:
[It] actually didn’t make a lot of sense for [Conway] to be doing it in the first place
Conway talks about how the tech community got involved in San Francisco politics, firstly after Twitter wanted to leave due to payroll taxes, then taxes on stock options, and supporting Ed Lee for election and forming SF.Citi.
The tech community started to say to itself, Wow, we need to stay involved in the government…It was really [Ed Lee’s] idea to form a tech chamber of commerce, and that’s what SF.Citi is.
Conway and Hammer talk at the event about Silicon Valley’s engagement in politics. Conway on the effort to keep Twitter in and improve the environment for startups. Conway:
The tech community in San Francisco…has had a hell of a civics lesson in the last year and a half…I think it can happen in every city in America
At the end of the day for all this creativity for these startups to happen, you need a base, you need engineers…by embracing technology, embracing these business positions it would help you, and at the end of the day out of these ecosystems would come more jobs, more spinoffs
SV Angel IV files an SEC document (here) announcing the intention to fund-raise. The company is investing in two to three startups a month, but gets referred to five qualified deals a day through its network.
Arrington interviews Conway and Lee at the event. Conway says he is an executive investor in SV Angel and Lee is managing the fund.
But I have a huge vested interest…I get to come in and help entrepreneurs, I get to do what I enjoy
Lee responds to Arrington’s question over rumors the fund is looking to raise $400 million, saying it is looking at investment, but declines to give details:
We are exploring all options
Lee denies that favoring companies backed by Conway in return for political support. He confirms that he has intervened to try to prevent a 14% tax on rentals arranged over Airbnb, and to keep city taxi regulators from banning Square. Lee:
This is less about Ron Conway and more about sf.citi and how we can help companies that are giving back to San Francisco
Conway talks about valuations:
Right now…a typical startup is in the $3 million-$5 million range
He says valuations are creeping up to around $6 million-$7 million range but are not overvalued, and M&A is still a ‘great exit opportunity’ for the startups as Google, Microsoft and even Apple are making acquisitions.
In the next year probably 10-15% of the portfolio will get acquired
On privacy issues:
Consumers are getting used to a more open environment on the internet so the privacy issues are really a moving target…Twitter, Facebook, Google are very sensitive to the privacy issues
He says hundreds of millions of social feeds show consumers aren’t backing away.
Conway talks with Arrington at the Tech Crunch office to talk about trends in the tech industry.
There’s two big trends that we see that are going to become billion dollar industries, one of them is real-time data which would be Twitter and what we call the real-time ecosystem, which is really any company that employs crowd-sourcing or collective wisdom to create this new corpus of real-time data on the web, which is the most valuable data on the web.
He says Foursquare and Quora are also examples of real-time data, and clarifies SV Angel isn’t invested in Quora. Growth in Facebook and Twitter alone is enough to confirm a second trend:
The other mega-trend is that the web is becoming more social…the phenomenon is that consumers are willing to share more about themselves…this phenomenon is growing to create huge commerce opportunities on the web
Conway closes the fund with around 15 investments. He says oversubscription by family and friends doubled its size to $20 million. He says he has identified three megatrends where he plans to invest the money – crowd-sourcing realtime data like Twitter, Foursquare, and Quora; social media like Twitter and Facebook; and social commerce like Groupon and Gilt Groupe.
Conway talks with the magazine about his network:
Entrepreneurs, because they need money, they are willing to share their crystal ball with someone like me. That’s the best thing ever.
Conway joins a protest at City Hall in San Francisco. He proposes having the advocacy groups TechNet and Net Coalition innovate a solution:
I have a constructive idea that I would like to propose publicly to Congress and to our neighbors to the south, why don’t we try to innovate a solution to the piracy issue…let’s do what we’ve always done before, which is solve problems with technology, not against technology
Mayor Lee announces the series of initiatives, known as San Francisco Citizens Initiative for Technology & Innovation and supported by Conway and Tech Crunch‘s Heather Harde. Lee:
Last year with our Mid-Market payroll tax and stock option exemptions, as well as during my campaign and our administration’s priorities, we have worked hard to attract and recruit high-tech companies and jobs to San Francisco
Conway talks about the defining qualities of entrepreneurs, his early days at Altos Computer, PTS, and Snocap. Thinking big is a must:
Many, many of our companies don’t think big enough…there’s some big companies, it could be bigger so as ambitious as you want to be, go for it.
Conway raises the funds via independent expenditure committees.
SV Angel joins Benchmark Capital, Goldman Sachs, Greylock Partners, Institutional Venture Partners, RIT Capital Partners and Valiant Capital Partners. From the previous roster, Sequoia Capital, Accel Partners, and Hadi and Ali Partovi participate. The round is reported at $250 million and values Dropbox at $4 billion.
Conway answers questions for the company – in which SV Angel has an investment – about hot markets, his investment thesis, and whether there is a bubble. On tech trends:
At SV Angel, we have a chart of “mega-trends” that we follow closely. The first and most obvious is social. We see a new kind of entrepreneur emerging in social. We call them “Behavioral Entrepreneurs.” These behavioral entrepreneurs understand that hardcore algorithms are no longer essential for success. Great UI and UX are becoming the new IP. Thanks to the low cost of computing, these entrepreneurs find innovation in human behavior, not pure technology.
Business Insider reports that among the investors in the fund are AOL, Conway, Milner, Benchmark Capital, Horowitz, Andreessen, Redpoint, and Sequoia.
Conway and Lee talk to Tech Crunch‘s Sarah Lacy backstage at the event about continuing growth in tech. Conway:
Silicon Valley and New York are spawning even more important companies, and more of them, because the internet watershed is not over yet. It’s still early days.
Conway says the industry is close to a recruiting crisis which underscores the growth:
We are going to get as bad as 1998
Lee on how angel investors contribute:
There are lesser evils than a lot of really bright, talented engineers who want to give it a shot
Business Insider publishes an Excel document apparently showing all of SV Angel’s 228 investments.
Y Combinator founders receive $150,000 each via Milner and Conway’s Start Fund. The investment will be convertible debt, which converts into equity in later rounds, with no cap and discount, the most entrepreneur-friendly terms.
Gur leads the round that includes Arrington, Conway, Andreessen Horowitz, and others for $1 million for the location-based app, which alerts people when someone in their circles is nearby.
Conway talks about the investment list that he calls his Crystal Ball:
The companies that we are investing in have three entrepreneurs today, are the Twitters, Facebooks and Googles of four years from now…
He introduces 12 entrepreneurs from portfolio companies including Votizen, Hipmunk, and GroupMe.
Conway gives an on-stage interview for the Graduate School of Business. Among other topics, he talks about spotting Google early on:
Investors didn’t get it, they said isn’t this like the rest of them? And we said, No, this is relevant, it gives relevant results
On succeeding in tech as a non-technical person:
Every step of the way, because I’m not an engineer, I’ve always made sure for every fund there’s a very technical person we can turn to…If you’re not technical you can be [the business] person
Conway, Sacca, and McClure are interviewed by Arrington about the Angelgate controversy at the Tech Crunch event. Sacca says it was a ‘misunderstanding’ that is ‘worth getting past’. Arrington:
We are not going to have a Jerry Springer moment here?
Sacca replies to Conway:
I am having a hard time resolving the person I quite literally grew up with in this business, with the person who sent the email to which I am replying. Your anger and personal accusations hurt, and it is clear they are intended to
Conway clarifies that Lee was at the dinner by mutual decision:
David Lee, my partner at SV Angel did not want to go the Bin 38 dinner. We talked and then agreed that he should go.
Tech Crunch reports an email sent by Conway to the group of investors who met at Bin 38. Extract:
I wish the Angel community could have the same integrity and values of the entrepenuer community, but unfortunately I now believe that is hopeless and your actions prove that.
What do you think the entrepenuers you have funded are thinking right now.
This is despicable and embarrassing for the tech community in my opinion.
Can you learn from this?
Conway is reported to raise the money from outside investors to add to deal volume. He is already planning to put his own money into 30 startups in 2010.
The newspaper covers Conway’s investments in companies like Twitter, as he favours products that can publish in real time, as well as instant communication platforms using various media and tools like geolocation. Investments typically average between $100,000 and $150,000, and sometimes as low as $50,000. Conway:
I’m in 50 companies today that nobody’s heard the name. One of these companies I’m in today will definitely have a $5 billion market capitalization in three years.
Intuit is reported to pay around $170 million for the Angel Investors company, compared with Mint’s most recent valuation at $140 million. Mint confirms the deal value and says it has 1.5 million users, found over $300 million in savings, managed $50 billion in assets, and helped people track nearly $200 billion in purchases.
Conway talks to Ideas Project about cloud computing:
Probably the most disruptive technology that’s just starting to blossom today
He says things like Google Apps allowing MS Office to run in the cloud were talked about for decades:
Now you have storage in the cloud, so the notion of all you need, a computer that has conductivity to a browser, that’s really all you need…we were talking about this for 20 years and literally with the advent of Google apps and storage in the ether it’s become a reality
The deal for the shoe provider is worth $1.2 billion at closing. Angel Investors’ stake isn’t disclosed.