166. Techstars: What Worked, What Didn’t, What’s Next (David Cohen)

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David Cohen of Techstars joins Nick to discuss Techstars: What Worked, What Didn’t, What’s Next. In this episode, we cover:

  • What was the original vision for Techstars, when you started?
  • How has that vision changed and evolved to where it is now?
  • Techstars Ventures– any concern that it sends a bad signal for those cohort companies that the fund does not invest in?
  • What does winning look like for Techstars? How do you measure success?
  • Do you measure common VC fund metrics like TVPI, DPI, IRR, etc?
  • Do you compare yourself against the other top accelerators? If so, where do you excel?
  • Started Techstars Anywhere in 2017, first full class in ’18… How does one run a remote accelerator w/ the same quality of an in person one?
  • I’m going to put you on the spot here– some founders do not have a positive experience going through Techstars or other accelerators for that matter. What type of founder is the program a great fit for and what is it a poor fit for?
  • I’ve noticed a focus both from you and Techstars on Mental health and wellness– what are your thoughts on this area as an opportunity for startup innovation?
  • How about the Cannabis industry. You’re based in Boulder– what are your thoughts on the sector and opportunity for founders?
  • Do More Faster is one of the must-have books for every founder. Super pragmatic, actionable insights. What lesson or piece of advice doesn’t appear in the book that, now in 2018, you’d add as a critical item for founder’s to appreciate as they go through their journey
  • Techstars’s FounderCon Europe 2018 was less than 2 weeks ago– What would you say is the biggest difference you’ve found when working with European startups vs ones in the US?
  • What do you think Techstars looks like in five years?
  • How do you balance time spent between companies that are succeeding vs. those that are failing?
  • If you were to do it all over again, what would you change?
  • What have you learned most about yourself through your experience at Techstars?

Guest Links:

Quick Takeaways:

1. The initial vision for Techstars was to a) improve the entrepreneurial ecosystem in Boulder and b)find a better method of angel investing.
2. Over time, the vision has expanded to a forming a global network of entrepreneurs, investors and programs.
3. Techstars currently has 40 accelerator programs across 13 countries
4. In the early days, startups got $12k-$18k when admitted to the program. Today that number is $120k.
5. The structure, mentorship and cohort model is largely unchanged.
6. The fund is integrated with the accelerator. It invests in every cohort company. In terms of follow-on, they have a co-investment approach, investing in graduates that have an institutional lead.
7. With Techstars rapid growth and increased mentorship, they now source 5% of Series A in the US.
8. What started as an accelerator program alone has now expanded to a committed venture fund and event-series including over 1000 events per year.
9. Many of the world’s best startup companies grow up in SF or Boston but are actually started in smaller cities with few investors.
10. 11% of all Series A’s in the US come through one of the top three accelerator brands. Techstars and YC each account for 5% and 500 startups accounts for ~1%.
11. In the Accelerator space, Techstars’ differentiation is its global focus. Their 40 MD’s live and work in emerging markets and have passion to build the entrepreneurship community there.
12. Techstars culture is to give first, be helpful, don’t have an expectation of return.
13. Techstars anywhere, a remote program, started in 2017 and ran their first full cohort in 2018.
14. Entrepreneurs who cannot come to the US due to family, health, or immigration complications opt into the ‘Anywhere’ program.
15. Anywhere program companies do have in-person experiences at the beginning, middle and end of the program.
16. Founders who come into the accelerator with unrealistic expectations, such as guaranteed funding, will come out of the program unsatisfied.
17. The ‘Equity Back Guarantee’ allows founders to take equity back at the end of the program. This happens 1.5% of the time. Often this applies to startups that expect to get a deal with a corporate partner, affiliated with the specific program, that ultimately do not get a deal.
18. Utilizing machine learning for Mental Health and Wellness is an untapped market.
19. Techstars runs a program called ‘Fail Club’ that any founder can plug into if they have a fear of failing.
20. Techstars has not done much investing in the Cannabis industry. They stay away from founders completely focused on Cannabis although have done some investing on the edge.
21. There are more dispensaries than Starbucks in Colorado, by a wide margin.
22. A Lesson that David would add to his book, Do More Faster, is that not everyone should raise Venture Capital; it is for a select group of founders and many should leverage other resources such as university and government grants.
23. Outside the US, it is considered “classically arrogant” for founders to be direct and straightforward with VCs.
24. In places, such as Dubai, it is too aggressive for founders to lead with accomplishments. They must lead with humility and what the impact they’re trying to have in the world.
25. Going forward David thinks Techstars will have more diversification of their products, more global reach, across more countries and they also may participate more at later stages.
26. Contrary to the belief of cutting losses to focus on winners, Techstars uses their ample resources to continue helping entrepreneurs who are struggling.
27. If he could do it again, David would have more “ringers.” He noticed competitors that found successful startups and gave them a deal in order to add their logo to the accelerator and tell some good stories.
28. Techstars had the first accelerator-backed company to go public, Sendgrid in 2017.
29. David Cohen focuses on strategy and David Brown executes.
30. A key lesson that he’s learned as CEO of Techstars is that there is often not a “forever CEO.” There may be a startup CEO, a scaling CEO and an IPO CEO.
31. Much of the VC Industry is about being showy. Many of the loudest, most hand-wavy folks with the bright shiny object are good at attracting LPs and entrepreneurs. David is the shut up and perform type.

Transcribed with AI:

0:03
welcome to the podcast about investing in startups, where existing investors can learn how to get the best deal possible. And those that have never before invested in startups can learn the keys to success from the venture experts. Your host is Nick Moran, and this is the full ratchet

0:23
Welcome back to TFR for a good one. The David Cohen, co founder of TechStars joins us today. David is credited as the visionary behind the largest global accelerator. What started as a small group of fledgling companies in Boulder Colorado, has now grown to over 150 countries over 1300 Alumni companies and more than $5 billion raised in this episode, David and I discussed the original vision, how it’s evolved the TechStars ventures fund and potential for bed signaling how they measure success, where they stack up against other top accelerators, why they started the remote program founders that have negative experiences. And finally we get David’s insights after the last 10 years running the program. I think you’ll enjoy this one. Here’s the interview with David Cohen.

1:18
Founder and CO CEO of TechStars David Cohen joins us today on the program. David is one of the founding fathers of the accelerator and the modern early stage startup investing movement. He’s invested in hundreds of startups, including Uber Twilio, SendGrid, full contact and Spiro accounting for over $80 billion in value. Prior to TechStars. David was a founder of multiple tech companies, two of which he led to successful exits. David, it’s a huge pleasure to have you. Thanks for joining us.

1:48
Thanks, Nick. Glad to be here.

1:50
Yeah, so I’ve heard you and and Brad Feld, talk about sort of the origin story of TechStars. Could you talk through what the original vision was for, for the program when you when you first started?

2:01
Sure, I’ll try to do that. I mean, the before that, maybe I’ll just briefly cover the business prior to that. One of the ones that we had worked for us, which was called pinpoint technologies, we sold it to a public company called Zol. And when my co founder and CO CEO here at TechStars, David Brown wrote about that company, the book was titled no vision all drive. And I would say TechStars is quite similar in terms of, you know, kind of the vision for it early on, we didn’t really have a cohesive vision, we were really just driven to do a couple of things, specifically one, you know, make the entrepreneurial community here in Boulder better over a long period of time. So we took a very long view on what that meant, and thought, how could we impact the startup community here, because we were, you know, angel investors in the community, there wasn’t that much going on, there was some good stuff going on. But we wanted it to be more and better over a long period of time. And the second motivation was, you know, outside, outside, making the community better was really just finding a better way to do or at least age, you know, angel investing, we were sort of fed up with the notion of going to a coffee shop and meeting an entrepreneur and hearing the pitch and deciding to invest, and then not really having much engagement or influence over that company, or really knowing much about what’s going on until they needed money again. So you know, it created a more hands on way to do real estate investing, you know, through TechStars. And also, we think had a big impact on the local startup community, which we then over time turned into this vision of creating this worldwide network to help entrepreneurs succeed, realizing that network value was really the big thing that could, you know, could add a lot to the outcomes. Did

3:42
you have the sort of the structure and the the cohort and all that planned in from the beginning? Or did that sort of evolve over time? Yeah,

3:51
it’s, it’s remarkably similar to the way it works today, we still have been very focused on small class sizes of just 10 companies. So although we fund over 400 companies a year now and are very scaled up, we do that across 40 accelerator programs globally, in 13 countries. So, you know, the class sizes stayed the same, it worked very well, early on, it was less money back then, I think you got, you know, something like 12 or $18,000 in the early days. And of course, now it’s more like 120,000 per company. So a little bit more cash to kind of get off the ground and going but the structure and the mentorship approach of of leveraging the community, not having it just be about a few of us, and then scaling it out, you know, 10 companies at a time around the world has proven to be a really nice, scalable way to grow the

4:42
business. What else has changed in the model? Um, you know, obviously,

4:46
the, the network is much more valuable. There are now 3500 mentors around the world. You know, pretty much every venture firm out there, you know, has invested in a TechStars company and just, you know, huge relationships We’re now sourcing somewhere around 5% Of all the series A’s that happened in the US. So I think the scale and the geographic footprint are really the fundamental differences. Yeah, I mentioned amount of capital that’s relatively minor. But really, we’ve taken a model and we scaled it, you know, the that’s on the accelerator side, with TechStars. More broadly, you know, we have added the venture capital platform since the early days, so we have more capital to follow on. And we also, of course, run, you know, 1000 events a year around the world to inspire entrepreneurship. Startup Weekend and startup week are now part of the text or his family as well. Well, we

5:35
certainly qualify as a venture firm that’s invested in TechStars companies. We’ve got, we invested in a company called jiobit, out of TechStars. Chicago, even funded Brian Larson’s new company drafted. He’s a former MD of the TechStars. Program stripe, so

5:51
you don’t like them? Unless they start? It sounds like yeah, that’s right. Got it. We’ll keep that in mind for the next group of companies. Perfect. Perfect.

6:01
Okay, so you mentioned TechStars. ventures? Is there any concern that, you know, it sends a an adverse signal if you’re investing in certain cohort companies, but not but not others?

6:13
Well, it’s a great question. And it’s one that I think, you know, it’s part of the evolution and figuring out, you know, the right way to structure all this, you know, I think we’ve figured that out in a nice way. First off, we invest in every TechStars company, so the fund is integrated at the accelerator level. And that’s a big part of how we use the capital. So we’re, you know, as companies come into the accelerator, it’s our capital that they’re getting. And in some cases, we’ll split that with a partner, you know, we run accelerator programs for folks like Amazon, and target and many others. But generally, it’s our capital that we’re putting up. So we’re gonna all of them. In terms of the follow on signaling question, we get that a lot, or we’re more of a, you know, a co investor. So if someone like yourself, or another firm comes along, and is putting capital into one of our companies at a later stage, we may decide to put a little lamb alongside them. Often, that’s just, you know, more or less maintaining our ownership. So we’re usually not the biggest investor, and we’re certainly not usually the lead investor. So that helps us to avoid those kind of signaling challenges. It’s more what those companies can do in the market. And where we see an opportunity to sort of participate, as they, you know, raise more capital over time. Got

7:25
it makes sense. And what does winning look like for you guys? You know, how do you measure success?

7:31
Well, more entrepreneurs succeeding, I think that that’s what we’re all about. I mentioned at the top, you know, TechStars is really the worldwide network to help entrepreneurs succeed. And that’s our goal, we want to do that, all around the world. We know that great entrepreneurs aren’t just concentrated in one geography. And if you look at the macro trends, this is really, you know, increasing over time, more and more notable companies being started all over the world, all over our country. And we want to be a part of those communities. Our data shows us really clearly that although a lot of large companies, you know, grow up in places like Boston or New York or Silicon Valley. Most of them don’t start in these places. Right. So we want to get to them where they’re starting, help them when they’re young, and then participate in their journey as they grow with the the ultimate goal of there being more and more great startup communities around the world, producing more and more entrepreneurial success, because we believe that that entrepreneurial success creates a better future for everyone. I

8:32
couldn’t agree more. I mean, it’s awesome. Some recent stats that showed that while the volume of coastal startups is much higher, the actual return profile, and success metrics have been stronger in some of the underserved regions.

8:47
Well, that is part of the strategy, right? I think also, as an investor, you’re, you’re sort of, I’m not sure you’re getting discount, but you’re sort of not necessarily overpaying or being in as many competitive deals with other funds at that early stage. And so you know, I think about a market like boulder or where we started, there are some great firms here, but certainly nowhere near as many angels or VCs and some of those coastal locations. And so that allows us to get in early at a reasonable price, help them grow, leverage our network to connect them to that later stage capital.

9:18
David, do you guys track the common VC fund metrics like TVP, DPI, R, et cetera? Yeah, of

9:25
course. Yeah. We have an institutional base of of LPs. And you know, we’ve sort of look like a normal venture fund in that sense and need to track all that stuff. Got

9:34
it. And so how do you compare yourself against the other top accelerators? You know, where do you think you excel? No pun intended?

9:43
Well, just so everybody knows the way the accelerator market shapes up and this this data, maybe about a year old now I haven’t looked at an update but you know, about 11% of all series A’s in the US, come through one of the top three celebrator brands TechStars is at about 5% of that every year Y Combinator is right around 5% of that every year. And then you have 500 startups that does a great jobs around 1%. And you have a very long tail of events, you know, 1000s of other things, some, some are really not accelerators, they, they call themselves that, but they do different things are more like an incubator. And that 11%, again, comes from the top three. So if you look at everybody else combined, it’s sort of under 1%. So just in terms of where the deals are coming from, I think, you know, Y Combinator and 500 are doing a good job and the Bay Area and TechStars is really sourcing, mostly around the world and throughout the rest of the US pretty effectively. When we think about differentiation, we think, look, all the all of these accelerated programs do a great job. You know, I think geography is a big differentiation. For us, we believe, again, the great startups are created everywhere, we want to participate full time in those communities. So our 40 Managing Directors who support us are actually in, you know, New York and Austin, in Chicago, and in LA and Berlin, right, Singapore, and so on. Participating in a very genuine way in those communities every single day, we’re not showing up and doing a deal once on how we live there, right. So I think geographically, we are networked into these communities in a powerful way. I mentioned that class size, you know, we’re not trying to go and fund 100 companies in a room at one time, that does work in my mind, you don’t really help them all. We want to give a lot of attention, sort of like where you’d want to send your kids, right. You’d want them to go somewhere where they have a lot of attention, a lot of focus in a school, and we do something similar with Tech Stars, with with our focus in small class sizes. And, you know, ultimately, I think it’s like anything, if you were I don’t mean to make too many university comparisons, we’re certainly not like a university. It’s not a curriculum, it’s it’s really tailor made for each company. But when you really think about a university that you might end up picking or an accelerator, a lot of it has to do with with their values and their culture. And again, no judgment, but ours is pretty specific around the notion of give first, no be helpful, you know, don’t have an expectation of return. And I think that is an attitude. That is why we have so many great mentors involved and why our alumni come back and help each other and create a really, you know, virtuous cycle long term.

12:25
So, so speaking of your global reach, and you, you sort of brought up this university analogy, you guys started TechStars, anywhere in 2017. And I think you had the first full class in 18. How does one run a remote accelerator with the same quality of an in person one, you know, kind of comparing the the in person University to some of the some of the online universities that have emerged? Yeah,

12:51
Nick? Well, you know, that’s a good question. And that’s what we’re trying to figure out. I’m not sure you can do it in exactly the same way. I mean, you know, we’re making some pretty large investments in the technology. You’re trying not to just make a bunch of video conferences, and we’re experimenting with lots of fun stuff. But ultimately, the question is, can it work as well, because it’s a way to reach more entrepreneurs. And one of the interesting things about it is it does have a little bit lower cost profile, right? When you use a technology, you don’t necessarily need an office, for example, we still do a demo day, and we still do some getting together of that class of companies. But certainly, it’s a little bit less expensive to make those investments. And so, you know, if we can get a little bit of leverage there, then we can reach more entrepreneurs. But we are very focused on our other values, right, which is quality before quantity. So we’ve been very cautious. As you mentioned, the first class was just three or four companies. This is the first full class and we’re going to really evaluate afterwards how that’s working. So far, you know, numbers look pretty good. They look pretty similar to our other companies, they, you know, maybe don’t have the exact same experience. But we try to augment that by plugging them in at the beginning, middle and end with physical groups of people, each other, their mentors, etc, as much as possible. But it’s a challenge. And it’s one that we’re trying to figure out through experimentation.

14:19
Is that a separate application process? Or are they considered for a location based TechStars? Program, as well as the anywhere program?

14:29
Yeah, when you apply to Tech Stars, you select a location and it’s treated like a location, right, you can say, you know, Chicago, in New York or anywhere, we tend to be taking companies in the anywhere program that are companies that are maybe impacted by, you know, an immigration issue, for example, and the US or, you know, have a family issue where they simply can’t pick up and travel for some reason. And so, you know, it so far has tended to be companies that that for whatever reason, you know, wouldn’t be able to physically be somewhere and that’s its turn out that most of the companies that have gotten in have applied to the traditional physical locations. And they’ve been really interesting, but you know, we sort of run into a roadblock with them and directed them at at anywhere.

15:11
Gotcha. So, David, I’m gonna put you on the spot here. Some founders do not have a positive experience going through TechStars, or, or other accelerators, for that matter. What type of founder is the program a great fit for? In what type of founder? Is it? Is it not the best fit for

15:29
sure, you know, so, we’ve learned over the years, you know, we have this sort of set deal. You know, we’re we’re investing a set amount of money, and there’s a set, you know, equity exposure as an investment to the company. What we traditionally heard in the early years is, you know, I’m an entrepreneur that I’m a little bit farther along in my career, I’m, you know, maybe done a few things have a network, you know, maybe had an exit, or have already raised a million bucks or 5 million bucks. And so therefore, you know, TechStars wouldn’t be a fit for me. And, you know, that always didn’t feel right to us, because we felt like we could drive the value for, you know, people who have had those networks and experiences before. And so we created, I don’t know, let’s be four or five years ago, we just decided to sort of leverage the gift first value, and think what would that mean, in the world of equity investing, and we created the equity back guarantee. And, you know, we have been super loud about it from marketing perspective, as we’re not with most things, you know, we’re more the performing do a good job type than wave our arms around tight, but we have this thing called equity back guarantee. And if you go through a TechStars accelerator, and it doesn’t provide the value, then you know, at the end of the program, you just say how much equity you want back and you return a commensurate amount of money? And no questions asked, right? All we want is feedback. And what we learn by doing that, is when does that happen? Right? So it happens about one and a half percent of the time, right? Where somebody comes back and says, I don’t feel like I got everything I was expecting here. Usually, we blow people away, right. And they’re, you know, they’re thrilled to have done it. But occasionally it happens. And what we found is, is much of the time when that happens, not all of it has to do with with bad expectation setting on the front end. And it’s often in the context of our partnership programs. So again, I mentioned at the top, you know, we run accelerators that are thematic, vertically focused, you know, Barclays is FinTech and Amazon is voice and AI, right, and Ford is mobility and you know, Comcast and so on, right? We have all these partners, we run these focus programs for them. And what we were seeing early on as that more experienced entrepreneurs, were coming in to them. Folks like Paul barbarian, right, a sphere who’d taken companies public before was was now running this company called sphere, I wanted to go to our Disney accelerator program, right. And that’s someone who you normally maybe wouldn’t attract. But the fact that it’s with that partner, and you’re able to meet, you know, Bob Iger in that case, right, that CEO there and have all this advantage attracts people, even though they have a bit more network and a bit more experience, the issue is when they have an expectation that they will definitely get a deal. Right. And so I think we’re much more careful now about saying, look, it’s an opportunity to get a deal, we’re not promising you that you’re going to have some distribution, or IP license or something like that with the partner, but you’re going to be exposed to the best mentors in the world. And that thematic area, in this case of Disney, the best storytellers in the world, right and incredible amount of IP. And for sphere, it worked out great. They got the BBA license and Lightning McQueen and other licenses out of that deal. And it was super valuable. And most of the time, that’s the case. But usually, when we see someone saying I didn’t get what I wanted, it’s because they had some false expectations. So again, a lot better and making sure people know, you know, why they’re doing this, which has access to network exposure to investors, and help with the business. Got it?

19:03
You know, I’ve noticed both from you, from Tech Stars, even from Brad that there’s been a nice focus on mental health and wellness, I’d like to get your thoughts on that area as an opportunity for founders that are that are innovating in that space, meaning

19:18
for them to be entrepreneurial around that. I think it is interesting, um, I’ve seen a few tools, but not many, you know, just sort of monitoring what people are saying and how they’re saying it and with all the interesting things going on machine learning, right and natural voice processing, I think there’s a lot of opportunity to identify it. You know, we haven’t seen that in our world much if there’s anything out there that you know, sort of does that kind of thing. I’d be super interested in seeing it. We have you know, seen it and some other areas right where it’s being applied to different situations like you know, security and the world right and terrorism and things like that where you can detect issues before they happen and it’s sure is an interesting possible Ready to maybe get the right help to the right people the right time. One thing that that we started doing lately is we do have this thing called Fail Club, which we run regularly inside the network. Anyone who feels like they have failed, might fail or is scared of failing. That often has a lot to do with mental health, not always, you know, invite them to just come and talk. And sometimes we’re able to pick up on things a little bit early there and try to get some help them but I do think it’s really an interesting area for entrepreneurship. Yeah,

20:32
my wife turned me on to this app called 10%. Happier. And it’s it’s a meditation app, but I just noticed the other day that they closed a large funding round. So that was, that was kind of interesting and fun to see.

20:45
Yep. And it’s, it’s cool. I mean, I think, you know, happier is one thing and not going the wrong direction. That’s the other thing.

20:53
Yeah, yeah. I love the you know, their their title and their target at 10%. That seems seems like a reasonable improvement. So another sector I kind of wanted to get your quick take on is the cannabis industry. I know you, you’re based in Boulder, and love to hear your thoughts on this sector and opportunities for founders, and if TechStars has made, or brought in some some cowork companies that that are focused there.

21:19
Yeah, so you know, Colorado was one of the early states to sort of get to legalization. People often ask, you know, what has it changed about about boulder? From my perspective, I’ve been here 20 Some years now. I would say that people drive slower. And, you know, there’s a few more people sort of passing through town, you know, hanging out, it can because it’s a fun place to be right. You know, people that maybe don’t have anywhere else to be, and they’re just, you know, chillin on the street, right, they can do that and have some fun while they’re doing it. So, you know, if crime has gone up or anything like that, you know, on the investment side, right now we the way we’re thinking about it is that is more of a brand sort of issue, we have not done a lot in the space. We’ve we’ve done for example, zero and pornography, not to compare it in any way. But just to think about some areas, we’ve done a little bit in the cannabis industry where it’s on the edge, meaning it possibly it’s like infrastructure that touches that industry, we’re generally staying away from startups that are completely focused on the industry today, because of you know, the the market is still developing, it’s sort of not global. And we’d like to, you know, invest in things that are sort of enormous and potential. So we’re keeping a close eye on it. We haven’t done a whole lot for those reasons. But as more and more places legalize, it becomes less and less of an issue. I think, you know, we’ll probably do a little bit more there.

22:49
Yeah, it’s been about five years now, since I lived in Colorado. We were in Fort Collins for a few years, but I wasn’t monitoring the data in any way but just noticing the number of dispensaries and infrastructure going up around me that had cannabis affiliated was was interesting and definitely noticeable clearly an industry that’s that’s in its maybe in its infancy, but yep. But in Colorado, you can you can see it.

23:19
You can there’s there’s more dispensaries than Starbucks by a lot. So it’s, you know, it’s a run up, like in any market where something new happens, you have probably more places opening, then we’ll make it and some consolidation that’ll happen. But I don’t know, I still think coffee is probably more popular. I’m just not totally sure. Yeah.

23:39
So do more faster. I think you published in 2010. One of the must have books for every founder, super pragmatic, pragmatic, actionable insight. What lesson or piece of advice doesn’t appear in that book, that now in 2018, you’d add as sort of a critical item for founders to appreciate as they’re going through their journey.

24:02
Gosh, there’s probably a lot and actually, as we work through, you know, sort of a refresh on it, I think we’re sort of working on a second edition, you know, we always, Brandon, I always said, we want to do more faster. And then we want to write do even more faster. And then we want to do even more even faster. But we just you know, it’s hard to get to these things yet. It turns out that writing is really time consuming. So we’re working on Refresh to a second edition of the first book and just pulling out some of the data things. It’s going to write more faster. David, that’s right, you’re gonna write more faster. It turns out that even though we sort of crowdsource the book, to you know, our mentors and alumni, you they all write differently and you end up having a unified voice and tie it together. So it’s actually more work to do it that way. But you know, I think a couple things I’d probably amplify, you know, more as, you know, one thing I think we missed is It’s sort of leveraging, you know, other resources around you universities. Government, I think I think the attitude in 2010 was at, you know, government’s just in the way, right. And I think, as we refresh it, you know, maybe there’s a few things like, you know, non dilutive grants, things like that, that we could talk a little bit about. It’s actually how I built my first company through more of a royalty based approach royalty based financing. So you know, not everybody has to raise venture capital, not everybody should raise venture capital, I think is one dimension that I’d like to add to the book, just as an example, but there are many, and, you know, we’re all surprises. But we hope to have that second edition now. Hopefully, next year or so.

25:44
So TechStars, founder con Europe 2018 was a couple weeks ago, I think, yeah. What would you say is the biggest difference you found when working with European startups versus those that are based in the US? You

25:56
know, we hear a lot that there’s a style difference, I think it’s changing, I think it’s becoming more like what we see in the US, in places like London and Berlin, Paris, you know, we’re operating now, sort of the, hey, you know, look at me, look, what I’ve done kind of social proof stuff is sometimes just culturally off, and it’s feeling to people. And so we’ve had to, you know, learn how to get people to want to help you. And to not come off as maybe classically arrogant or American, however you want to think about it, which we sometimes hear, right, and I think walking in and saying, Hey, I built this thing. And I’ve already got, you know, 300,000 users, and I’m already at this race, it’s sort of shocking to a lot of people from from other cultures. And again, I think Europe, and the UK are sort of getting to a place where it’s more normal to just be at sort of direct and straightforward. Places, you know, around the world outside of Europe, I still see that as a large challenge, I was just speaking to someone gave me some feedback on our program in Dubai. And they said, you know, great program, lots of great connectivity to sort of monitor construction and city building, right, which is what they were focused on. But, you know, it seemed like if they lead with their accomplishments, people didn’t want to help them. And they learn that they had to lead with, you know, humility, and what they were trying to do in the world, which, by the way, is not bad advice in general. Right, but I think that that sort of the, the, again, I don’t mean to over stereotype, but the American way, which translates into the TechStars way, and I’m sure it’s true, most of us, right, we’d like to walk in and, you know, sort of impress people and blow them away wherever we can, and maybe position aggressively how great things are going. And I think sometimes that’s, you know, been felt as a turn off around the world that we’ve had to learn from interesting.

28:00
David, what do you think TechStars looks like in five years?

28:05
Well, I think we’ll, we’ll have some more diversification of our of our products. Yeah, I think right now, you know, much of what we do is really, you know, the accelerator. And I think, you know, both in scale and scope, sort of having impact at different stages, is the goal. So, if you’re gonna help entrepreneurs succeed, it’s not just getting them off the ground, it’s, it’s helping them as they grow. And a lot of our companies, you know, they go and raise an a round or B round, and maybe they get into a struggle with their board or with their situation. And I think we can be helpful in those circumstances as well, with the network and almost having SWAT teams that can come in and sort of have impacted and later stage and help that board or help that CEO. And, of course, talent, you know, I think it’s something that that we’re massively exposed to around the world, we have, you know, 100,000 people a year going through Startup Weekend that are interested in entrepreneurship, we need to drive some of that talent that wants to be plugged into entrepreneurial companies, you know, through the network, that that can be later stage. So I certainly think you’ll see us and more countries, and I think we’ll be in at least 20 countries investing by then, and we’re already on 150 with our community development event. So that’ll probably grow a little bit as well. You

29:23
know, I hear VC saying that, often they should have done a better job of cutting their losses. So those startups in their portfolio that are are going sideways and not working out, they should have spent less time with them in more time with the winners. You know, something you just said there about kind of, you know, your focus on helping startups throughout the stages and getting involved with a variety of different issues. You know, it made me think that you guys have a lot of volume, right? There’s only 10 startups per cohort, but you’ve, you’ve got great rep representation across verticals. and NGOs and horizontals. You know, how do you budget your time and think about, you know, which which startups to work with. Because, you know, often it’s the ones that are struggling, that are reaching out for a lot of help.

30:15
Often it is, if I, if I look on my my whatsapp or whatever, right now, I’m sure I have one or two of them that are struggling in some way. And, you know, you mentioned the top, you know, we’re investing hundreds of companies, it’s, you know, we’re over 1500 Now, right, and then I have my personal portfolio from before that. So, you know, it’s high volume, but I think, you know, you sort of look at, you know, when we get that question, the LP community, I know, you have a lot of listeners that are, you know, maybe LPS that invest in funds as well. You know, they look at and they say, Well, this, this doesn’t look like the conventional, you know, venture fund that I invest in, how do you keep up with all this stuff? So we do get that question a lot. You know, the answer is, you know, we’re not a traditional fund, and we don’t have a traditional strategy. You know, we are over 200 people as part of the answer. You know, in each of these communities, we have two or three people that are physically next to the companies that we’re funding and helping them and then we have a mentor community that we can leverage as board members and whatnot. So I personally, you know, try to spend my time on high value stuff. But I believe that it’s high value to help an entrepreneur who’s struggling, right, and so I will try to limit my time on it, I’ll try to have some high level advice and feedback for them. And then I’ll get them to, for example, our corp dev group, right, which is five or six people, San Francisco based, they’ve managed 150 exits now, you know, maybe we can help that company, find a soft landing, and I have a team that can help me do that. So you know, I try to be responsive to everyone in the network, at least a high level, and then get them the right people internally. So unlike most venture funds, we’re not just you know, four or five partners. And that’s it, that’s the resource we have, we are surrounded by a cast of hundreds, and then 1000s of mentors that are willing to jump in and be helpful. And so we tried to leverage that resource wherever we can.

32:10
If you were to do it all over again, what would you change? And I won’t let you say nothing.

32:17
That implies that I would do this again.

32:20
Isn’t that the truth? When you know how much work?

32:23
I think, you know, the one thing that always comes to mind that when people ask me, you know, if you’re starting on day one, what would you do differently? And my answer is always, gosh, I’d have more ringers, I think some of my competitors did a good good job and sort of realized that if they, you know, offered big discounts to companies that were already up and going or, you know, slap the label, slap their label on them, even though they’re already, you know, meaningful enterprises that it would sort of benefit them. And we really didn’t do that we built it from scratch and had sort of this pure attitude about helping entrepreneurs get to success. And I think, you know, all of that really is in the world of marketing, which, you know, if you’ve talked to Brad, he likes to say, you know, the word marketing makes him throw up in his mouth a little bit. It’s never been a heavy focus of ours to be, you know, great at telling our own story. And I think I would have put a lot more energy into that, you know, starting with a few ringers that I knew I could tell stories about. And then, you know, just being a little bit more, you know, loud and proud. It’s not my person, my personality personally, and it hasn’t been the company’s. And I think that’s an opportunity, because a lot of people in the bay area or, you know, different places around the world may not know us, as well as they know some of our competitors. And there’s no reason for that, given our performance.

33:42
It’s an interesting parallel. I got my my start with AngelList syndicates. So we started one a few years ago. And I noticed that a lot of my peers ended up starting to carve out small allocations in series A and Series B startups that were clearly winning, as opposed to doing sort of the early angel round precede round early seed rounds. And we we sort of stayed true to the precede stuff, you know, we do all precede deals, and it was a little harder, because you don’t have you know, the who’s who co investor list on your group, which, which makes the race process easier on that platform. But fortunately, you know, time heals, heals those things. And portfolio is doing well. So now, now we’re in good shape. But But yeah, I think I saw a parallel sort of with that phenomena. A lot of people just go in for winners and sort of Yeah, figuring out how to carve out a little allocation.

34:40
Yeah, and I don’t mean to minimize the success that others have with that approach and and genuine way, right, but I think it’s something that you know, while we’ve had success in the portfolio, and you know, we had the first ever accelerator company go public, right in 2017. We got plenty of unicorn type companies, but I think you know, having them earlier right would have Um, you know, created this sort of what they used to call posters, right? And the VC world. We just didn’t think about it. And we have never had that sort of marketing focus until very recently, we really had no marketing people at all, in fact, so

35:13
feel like, change, and feel like I didn’t do my homework. So what was the first accelerator back company that went public in 17? Oh, SendGrid? Oh,

35:22
yes. Okay, I’ll email infrastructure company. Yeah. Awesome.

35:26
So, David, what have you learned most about yourself through your experience at TechStars.

35:32
Um, you know, I think it happens to be in a stage in my career, you know, I’m actually getting close to turning 50, I like to say that I’m barely on my 40s. Right now, people can misinterpret that however they like. And I think that’s a party a phase of your life where you get introspective and learn a lot about yourself. And I think mostly, it’s just how, you know, how I’m perceived by others. And, you know, I think you learn a lot by working with, with startups who are willing to tell you that, right. And, and, of course, you have all the tools today to sort of understand how you interact with people. And so, you know, I’ve learned how to focus on my strengths, and maybe just be aware of some of my weaknesses. And I think that’s an opportunity for everybody, I wish I would have done it earlier in my career. And I’ve, you know, as an example, I’ve brought back my co CEO, David Brown, I’ve started four different businesses with him across 25 or 30 years now. And, you know, brought him in here, probably a little too late, when the business was already scaling, were probably 50 People now or a couple 100. And I’m not that manager, right? I’m not that person who communicates information. Clearly, internally, gets everybody aligned, you know, builds a team. I’m more let’s go climb that mountain, and strategy. And yeah, my co CEO, David has been much more, you know, execution and get stuff done. operations. And I think, you know, 1015 years ago, I didn’t know that about myself. So just learning. And it’s a lesson for every founder, right? I mean, you’re the founder and CEO of a thing. You’re probably not the Forever CEO. There’s probably a scaling CEO. And there’s probably a IPO ng or, you know, late stage CEO, at least, there are rare exceptions of those awkward Berg’s in the world. But just sort of being introspective about what you’re great at and filling your own gaps. That’s a lot of what I learned about in the last 10 or 15 years.

37:31
Well, I’ll say just from my experience, and I’m not trying to blow blow smoke at all here, but but I’ve known David Brown now for a couple of years. And I’ve known Brad for a few years. And I don’t think there’s a group of people that practice what they preach more so than then the leadership team at TechStars. As far as giving first and being accessible and being helpful, and just having a really glowing reputation for the people that have worked closely with you guys for a long time. So here again, I’m not trying to blow smoke. But it’s it’s important to note that on the show, because I don’t think that that we could say that about but everyone that’s that’s participated. So well,

38:14
it means a ton to hear that it’s really the most gratifying thing that we can hear. And, you know, our values are really important to us. And I thought I had already sent you the check. I mean, do I owe you what you’re trying to say?

38:28
I’ll send you a wire. And David, if we could cover any topic here on the program, What topic do you think we should address? And who would you like to hear speak about it?

38:41
I would love and I mentioned this on a few other interviews I’ve done I would love to hear more about kind of the, the realness of the industry that we all plan. It’s been a hard industry for me to plan because so much of it is about being showy, and marketing yourself. And I’m sure that’s true and true of more industries, you know, but I love the shut up and perform type always tried to be that type, and let the results speak for themselves. Whereas I feel like sometimes in our industry, whether it’s attracting LPS or entrepreneurs, it’s, you know, who can be the most hand wavy and, you know, have the next bright, shiny object. And, you know, maybe it’s just sort of the topic of marketing and venture capital, from the perspective of limited partners who you attract and entrepreneurs who you attract. It’s

39:34
a great topic. I just had an entrepreneur that we’ve made an offer to, and then he had a bigger name firm come in and make him an offer. And he was on the fence about who to go with. We’ve been working with him for a few months. And I all I asked him is can you just call a few entrepreneurs in in each portfolio, and he did that exercise and fortunately, we’re leading the route now. So Yeah, you know, it’s one of the but the other firm is definitely much more public and much more shows than us. So it’s a it’s a tough tough call tough call for him. David, what investor has influenced you most and why?

40:12
Well, I gotta say, you know, it’s it’s the guys at Foundry, we’ve been super fortunate to have them as mentors and really good friends. And it’s a broad group. They’re really everyone. You know, Brad is obviously had a huge personal influence on me, Jason Mendelsohn, who’s been around TechStars since day one. And you know, Linda Lachman who’s is over, they’re now running their fund to funds, you know, they’re an LP now as well in other funds. And Lindell is someone I’ve learned a ton from sort of in how to think about, you know, your partner’s your limited partners, and, you know, communicating with them and, you know, having real relationships with them. And so, you know, I think it’s, it’s all of them, it’s just an amazing group, and there’s so many others in the industry, but when I really think about every day, you know, we’re so fortunate to have them in Boulder, very close to us, and been able to rely on them as resources. So, but yeah, I think that it’s one thing the industry is good at, right? They do put out the information and you know, blogs like like Fred and you know, Mark, Sr, and others are super helpful to everyone. So, you know, those that do that, we think as well. And

41:25
finally, what’s the best way for listeners to connect with you?

41:29
I think pretty easy. personal website is David G. cohen.com. I’m david@techstars.com. If you want to email me, at David Cohen on Twitter, and I’m not hard to find if, if you can’t find me online, you’re probably not trying very hard. So I invite you to do that.

41:48
Well, David, I was really looking forward to getting a chance to connect and do this interview today. I appreciate you sharing your time and hope you had a great Father’s Day with the kids

41:58
that didn’t can congrats on your new one. That was your

42:01
your first right. Appreciate that. Yeah, it was my first Father’s Day. Yeah. And

42:05
thanks for doing this. This is a valuable resource for everybody. Thanks for having me on. Well, thanks

42:09
so much, David. Have a good one.

42:16
All right, that’ll wrap up today’s interview. If you enjoyed the episode or a previous one, let the guests know about it. Share your thoughts on social or shoot them an email. Let them know what particularly resonated with you. I can’t tell you how much I appreciate that some of the smartest folks in venture are willing to take the time and share their insights with us. If you feel the same accomplishment goes a long way. Okay, that’s a wrap for today. Until next time, remember to over prepare, choose carefully and invest confidently thanks so much for listening