Investor Stories 9: Why I Invested (Carter, Gasser, Go)

Nick: On today’s special segment, we have Jeffrey Carter. Jeffrey, can you tell us a story about a startup that you did decide to invest in, what it was that led you to yes, and how that investment has worked out so far?

Jeffrey: I invested in YCharts in their first round. I got the company because it was financial services. I have a financial services background so I got that. But the thing that really impressed be about the company in early stage was Shawn, and it’s been very, very interesting to continue to invest—I’ve invested at the rounds after—and watching them develop. I think the company, from its inception in 2009 when I first heard about it, to today, is similar but different. And the playing field that it’s playing on is bigger than it used to be. The execution of the team is a little different and the focus of the team is a little different. So it’s been fun to watch them—I wouldn’t call it a pivot, but a transition. And that’s been cool.

Another one that’s been really interesting to watch is Kapow Events, where I was kind of the first check in the deal. Others came in, wrote much bigger checks than I did, but when I met them, it was two guys and a box in an office in the Sears Tower. And my wife actually talked to them. We actually worked with them on the business model even, and talked to them about it and developed the relationship with Dan and Marc over three or four months, wrote the check, and they have just executed like crazy.

And everything with them wasn’t perfect either. I mean, people look at them now, they’re adding a new city every twenty days, they’re growing like crazy, and they’re really doing well, but in the early days, that company, they could have failed just like everybody else. So that’s been very, very interesting to watch. They all go through growing pains, but at a seed stage level, if you back a great entrepreneur, they can figure out how to survive.

Sam Rosen is a guy like that, with Desktime. And Sam is still at it with Desktime. He’s transitioned the company a little bit, I wouldn’t call it a pivot, I’d called it a little bit of a transition. He seems to have found something that’s working and he’s going for it. That’s been a lot of fun, to see him develop as an entrepreneur and see him sort of move his idea around to find the fit. Find that product market fit. It can be totally frustrating, but once you find it, it’s exhilarating. And it’s exhilarating for investors too.

Nick: You got in at the seed round with Kapow. That business model is blowing up. And I was over there the other day meeting with Saad over here on Wacker and Lake, and the cool factor of their office is pretty awesome to with the bar in the lobby there and the massive moose head. [both laughing]

But you and I were talking about Dabble recently. Can you tell me a little bit more about Dabble?

Jeffrey: Well, Dabble—I saw them pitch at an HPA…we call it an ambassador circle meeting, in January of 2012. And in that room, it happened to be the tech, the digital IT tech people, and none of them got it, but I did. Or thought I did. I talked with the founders, worked with the founders, wound up leaving a HPA investment, and there were a lot of trial and tribulations with the founders. They moved away and they eventually abandoned the company. And the interesting thing about that company was the idea was so good. There was nobody working on it full time, or really tending it or pushing it, and no money. It survived.

And new CEO fell into our lap. He saw Dabble online, he called them up and said “Can I start this in my town?” and we said “By all means” and this guy hustled his ass off and the company’s starting to thrive. And it just took a change of a jockey with a pretty great idea to make the company go. So they’re raising another seed round of capital at this point, even though the company’s been around for a long time, and—a long time in startup parlance. I think since 2012. But they’re raising a lot of capital and they’re in three cities and they’re doing well and we’ll see where it goes. So I just love the hustle in the CEO, though. He’s just a tremendous, tremendous person. Happens to be an ultra marathoner as well, so he knows how to go the distance.

Nick: Whoa. Hopefully we can get together again next, in couple years, and talk about the success story of Dabble.

Jeffrey: Yeah. Somebody called them up from Zurich, Switzerland, and they sell out faster in Zurich, Switzerland. So they’re actually international in scope. [laughing]

Nick: Wow!

Jeffrey: It’s amazing, you know. It’s just funny.

Nick: Feels a little like a GroupOn or a Belly in terms of that channel roll out.

Jeffrey: I think the target market is definitely the same. It’s a different concept, and it’s one where the owner of the SMB doesn’t have to give up anything to get customers in the door. They actually get customers. They get something and customers in the door, so it’s a twist on that strategy.

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Nick: On today’s special segment, we have Eric Gasser. Eric, can you walk us through a situation where you did decide to invest, what the key factors were that led you to yes, and how that investment has worked out so far?

Eric: Well one of the great companies that I thought was solving a problem, and there’s a few other people out there doing this, is called Protfolium. Their CEO was a young kid when I first met him, and he has an amazing backstory where an angel gave him some capital and said “Look, I believe in what you’re doing. I’m just gonna give you a check and just go.” So he gave him a check, he went to build out this platform to allow—basically think of it as the LinkedIn for college students, right. It’s been done a hundred times, and I get it, but this guy had a unique spin on it. He built something similar to solve a really hard problem for himself when he graduated from school to get himself a job.

He realized that, for him to be successful, he needed to go back to school and learn how to code so he can build this thing. Because he knew the seed money he’d gotten—he wasn’t gonna be able to pay someone to do it, it just wasn’t enough. So instead of beg, borrow, and steal, and all the other friends and fools and all that con stuff, he went back to school, spent some time, I think, while he was in school, wrote—built out an MVP, and then he came to Tech Coast Angels.

And he said “Look, I’ve had one of the largest employers for college kids in the country. I’ve got great connections with the school system here in San Diego, in California. We really think there’s something here.” It was one of those things where I could see what he was building, I could see what he was doing, and it was kind of a no brainer for me. It was kind of like he’s solving a problem that needs to be solved, and he’s doing it really, really intelligently. And he was thinking about revenues, but they weren’t actually driving his decision making. The customer was driving the decision making.

And that meant a ton to me, because typically what happens is, the founders, once they see cash, they gravitate towards the cash and lose focus on the customer. Especially this early stage. And so during the due diligence meeting, we were done, he was going through a local incubator at the time, and I grabbed him. The advisor, I pulled him aside and said “Look, how much do you need to stay alive for the next three months so that we can go through due diligence, we can syndicate this deal, everything we need to keep it going?” and I was willing to write a check right then solely based on the fact that someone else believed in him—which that could mean I’m crazy, but when someone writes a check and says “Go away and build it,” that means something. The next element was that he really believed in his customer and didn’t want to pivot or shift his model to follow the cash. I believed in that model.

So since then, the company’s gone through a little restructure. They launched their mobile app, they’ve got revenues that are—in my opinion, they’re doing great. They’re solving a hard problem and they’re getting people out of college jobs, which is great. Which sounds kind of weird, right? When you graduate college, aren’t you supposed to just get a job?? Right? Like, you graduate college and you get a job! The research is totally counterintuitive, right? The research is once you get out, you can’t find a job because you’ve never had a job before.

So no, they’re solving a familiar problem. They had to go through some operational changes. They launched their mobile app, they’re killing it. They’re doing great. And they’re be on their next v2 and all that stuff in probably the next three to five months. So be on the lookout for them, especially if you’re a student here in California.

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Nick: Today we have Rob Go of NextView Ventures. Rob, can you talk us through a situation where you did decide to invest, what the key factors were that lead you to yes, and how that investment has worked out so far?
Rob: I should’ve prepared.
Nick: Pick a good one!
Rob: Oh, I’ll try not to pick a bad one. [both laugh] So, you know, we invested in a company, I think a year ago, called Sunrise, which is a mobile calendar application lead by a Pierre Valad, and Jeremy La Van who were both formerly at Foursquare. And there were a couple of things that I was really excited about from that company. One, from a category standpoint, I think the calendar and scheduling space is super interesting, because you know, if you think about the productivity software that everybody uses, there’s a few pieces of software we use multiple times a day every single day and calendar is one of them. It’s also one of the native mobile applications that there isn’t a dominant third party app that’s insanely popular—or there wasn’t at the time. So Evernote was there for notes. Mailbox had just come onto the scene and was doing really well, and there are other examples like that. So I thought Sunrise had great potential in that area, and the data that’s been collected about what people have done, who they’re doing it with, what they’re attempting is really, really valuable.
So that was one of the areas that was real interesting. The other was that the team, I though, was obsessive—as you said in the past—around product quality and product design and that was really what was gonna win in this market. We talked to a bunch of other companies in the similar space that had a big focus around artificial intelligence and things like that to try to anticipate what you’re gonna be doing or how to master scheduling, or what information you’d want to see in context with your meetings, and Pierre and Jeremy’s focus was there’s a lot of things that are broken that don’t require fancy rocket science, it’s just about making something insanely intuitive and simple to use. And from there, we can start to build other protective motes around the business. And I appreciated that strategy because it allowed them to get to market much more quickly can competitors. It allowed them to iterate much more quickly over time, and led them to become probably one of the top third party calendar applications out there in the app store. If you look on App Annie, they’re well ahead of Mailbox, for example, which is an interesting comp for them in the productivity category.
And I say the third thing, also related to the team is one of the things I look for when I do due diligence calls is what I call superlative feedback about founders. And when I do a reference call, I always say “So, you know, how does this person stack up with other designers, product people, business people that you’ve worked with in the past?” And I distinctly remember talking to some of their former colleagues and I’d say “So were they in the top five percent, ten percent, twenty percent?” and the response was “No, these guys are the best. By far, number one.” So again in the power law kind of view of the world, when you here somebody’s the best, that’s usually a pretty fantastic sign.