I recently had a conversation with Harry Stebbings on his 20 Minute VC Podcast

My partners Jon, Phil, Tony, Kevin, and Puneet were all earlier guests of the show – so I was excited to cover a different part of the True Ventures story – diving deep on True’s model, portfolio construction, and how we think about risk internally

I really enjoyed interacting with Harry and hope the content is helpful for anyone who is interested in the business of venture capital

You can listen to it here:

http://www.thetwentyminutevc.com/adamdaugelli/

Would love to hear your feedback in the comments or via Twitter

https://www.linkedin.com/pulse/id-known-what-we-were-starting-ray-dillinger/

In a bubble you stop worrying about whether there’s gonna be more money behind you. The coordination failure through time is eliminated. That’s the functional role that bubbles can play at the frontier of the innovation economy. And this is simply a-a follow on to suggest theoretically that you should expect to see in bubble conditions riskier start-ups, further out crazier ideas, ones that might require so much money to get going. “Geez we’re gonna start a new automobile company. From scratch?” That only under something resembling bubble conditions would anybody take it seriously. And then Nanda and Rhodes-Kropf went out and actually looked at the data and what they found was that going back now 15 years start-ups that were founded during the dotcom, telecom, internet bubble at the end of the 90’s had a, a bimodal distribution. It wasn’t a normal distribution. More of them failed completely. But those that succeeded, succeeded bigger. There was an actual empirical demonstration of the phenomenon of financing risk that they talked about and the coordination failure that a bubble solves.

Source: Bill Janeway on Productive Bubbles 

I’ve been thinking about this passage from an article about Sequoia’s Michael Moritz recently:

“Moritz waxed philosophical by comparing venture capital investing to bird spotting. “I rarely think about big themes. The business is like bird spotting. I don’t try to pick out the flock. Each one is different and I try to find an interestingly complected bird in a flock rather than try to make an observation about an entire flock.” For that reason, while other firms may avoid companies because they perceive a certain investment sector as being overplayed or already mature, Moritz said Sequoia is “careful not to redline neighborhoods”.

Continuing with the ornithological analogy, Moritz pointed to Cisco and said, “There’s a lot to be said for investing in the ugly duckling.” When Don Valentine led Sequoia Capital’s investment in Cisco, many others had passed on the husband and wife founding team of Len Bosack and Sandy Lerner.

At its core, venture investing is a job that can be broken down into people (execution) and markets.

Continue reading Markets and People (or Thoughts on Venture Investing)

After CES, I wrote a post discussing what we look for when evaluating investments in consumer hardware products.

Since then, I’ve been involved in a series of conversations with investors, Founders, and partners of consumer hardware companies – both small, medium, and at scale.

As an increasing number of factors have brought down costs of starting these companies, there has been a growing meme around the how “easy” building a consumer hardware businesses has become – which any Founder of a scaling consumer hardware company would tell you in simply untrue. (You can see our opinion on it here and here.)

Continue reading The Challenge of Real World Interactions (Or Why Consumer Hardware Startups are Hard)

I’m approaching my fifth year at True Ventures and the ecosystem has changed a great deal since I joined full-time in June of 2010 (and even more since I started spending time with the team in June of 2009) Startups are now cool, the early-stage venture capital ecosystem is flush with cash, and more and more individuals are looking to join a high-growth technology company.

For an individual learning to invest, I was fortunate to join during a relative bottom in the market.  Being able to learn the mechanics (and feel) of the early-stage venture capital market during a quiet time helped speed up learning as well as built confidence in holding unpopular views.  It takes 10+ years to know if you’re truly good at venture capital (real businesses take 7-9 years to build value) – but the “best performing” investments I’ve worked with at True (based on revenue growth and quality of senior talent) were incredibly unpopular when we made the investment.  Sam Altman (now at YC) had the same observation across his angel investments.

Continue reading Focused and in the Room (or the Value of Being Present)

In 2011, I attended my first Consumer Electronics Show in Las Vegas. While there were a handful of startups scattered throughout the main expo floor, including True-backed Valencell and Makerbot, the majority of companies in attendance were the traditional consumer electronics manufacturers that have ruled the shelves of Best Buy for the past few decades.

After missing CES in 2013 and 2014, I arrived this year expecting to see a similar mix of companies. However, I was thoroughly blown away to see the entire Sands Expo Hall filled with small, emerging consumer electronics businesses—hundreds (if not thousands) of new companies across a variety of brand new categories, including smart homes, digital health and “maker” products. And this didn’t even include the drones and other new technology areas in the main expo hall.

For a market that was dead before 2008, connected devices are back in a big way and are seeing more innovation (and funding) than ever.

At True, we’ve been fortunate to invest in more than 15 new startups selling physical products, including 3D Robotics, Makerbot and Ring. We even hosted an event last year called “True Atoms,” bringing together the best Founders and executives from across the lean hardware ecosystem to share best practices and learn from one another.

And while many trends, including decreased component costs, increased access to smaller-run manufacturing and the growth of cellphones, have made it easier than ever to launch a connected-device company, the challenges of scaling remain incredibly complex.

We previously wrote a blog post talking about hardware companies as “the double black diamond” of startups. One year later, I wanted to share some more thoughts and ideas about what we look for in new opportunities in connected hardware.

Continue reading Working with Atoms: 5 Lessons for Building a Hardware Startup

Last week, news leaked that Jay-Z’s Project Panther was in the process of purchasing streaming service Aspiro.

While I don’t believe that most users care about (or could discern the quality of) high fidelity audio, a major artist choosing a single platform to focus on could have an interesting impact to the overall market (specifically Spotify and Soundcloud)

Continue reading Catalog is King (or Why Jay-Z Buying Aspiro May Make Sense)

Wanted to share some quick thoughts after a great week at CES 2015 in Las Vegas:

Continue reading Notes from CES 2015

Just finished reading “Debt: The First 5,000 Years” by David Graeber.

It was recommended as a good source of historical context on financial markets particularly with respect to crypto currency and does a great job walking through the growth and evolution of financial systems. (The first half is incredibly dense, but gets easier as you get closer to modern times.)

Continue reading Debt: The First 5,000 Years