Key Moments
Ron Conway at Startup School 2013
Y CombinatorKey Moments
Ron Conway shares insights on early-stage investing, founder qualities, and fundraising strategies.
Key Insights
Invest in founders with strong humanistic values and a proven commitment to their investors, like Evan Williams with Odio.
User growth and engagement are critical indicators of a startup's potential; metrics should not be ignored.
Founder qualities like deep product focus, decisiveness, and the ability to build a strong team are essential for success.
Fundraising success hinges on finding value-added investors, maintaining momentum with a term sheet, and confirming agreements in writing.
The startup landscape has evolved from algorithm-based IP to design and user interface IP being paramount.
Entrepreneurs must rapidly mature and adapt to growth, a process that Ron Conway finds deeply satisfying to witness and support.
INVESTING IN FOUNDERS: THE PEOPLE-FIRST APPROACH
Ron Conway emphasizes that SV Angel prioritizes investing in people first. He illustrates this with the example of Evan Williams, founder of Odio and later Twitter. Even though Odio failed, Williams' integrity in returning investor funds prompted Conway to invest in his next venture, Twitter, without hesitation. This highlights Conway's belief that character and ethical behavior in founders are as important, if not more so, than the initial product idea.
THE POWER OF USER GROWTH AND METRICS
Conway stresses that user growth and engagement are undeniable indicators of a startup's potential. He cites Facebook and Twitter, whose metrics were already impressive in their early stages, as examples of companies that could not be argued with. Even if an investor isn't a personal user of a platform like Facebook, rapid user adoption and high engagement times signal a significant market opportunity and validate the product's appeal.
IDENTIFYING HIGH-POTENTIAL STARTUPS: TWITTER, FACEBOOK, AND SNAPCHAT
Conway discusses his early investments in major social platforms. For Twitter, he invested in Evan Williams and learned about Jack Dorsey. For Facebook, he was initially drawn by Sean Parker's reputation and then impressed by Mark Zuckerberg's singular vision and confidence, despite a slight underestimation of Facebook's ultimate user count. He also notes the pattern recognition in investing in Snapchat, seeing it as a continuation of the trend of social apps changing communication, following the success of Facebook, Twitter, and Instagram.
PINTEREST: PERSISTENCE AND FOUNDER QUALITIES
Pinterest serves as a case study for handling a startup that doesn't explode immediately. Ben Silberman, the founder, demonstrated remarkable persistence, iterating on the product for over a year and a half through constant user feedback. Conway was particularly struck by Silberman's calm, cerebral, and thoughtful demeanor, contrasting with more typically outspoken entrepreneurs. This deep focus on the product and user experience, combined with a calming presence, were key indicators to Conway.
MASTERING FUNDRAISING: STRATEGY AND EXECUTION
When it comes to fundraising, Conway advises founders to prioritize value-added investors over purely valuation concerns. He uses Airbnb as an example, where opting for Andreessen Horowitz and Jeff Jordan's expertise, despite other investors offering higher valuations, proved critical. He also stresses the importance of maintaining fundraising momentum by securing a term sheet quickly, which creates urgency for other potential investors, and diligently confirming agreements in writing to avoid misunderstandings.
ESSENTIAL FOUNDER QUALITIES FOR LONG-TERM SUCCESS
Conway highlights several crucial founder qualities: deep product focus, meaning founders are more interested in building a great product than in external press; decisiveness, which applies to team building (hiring and firing quickly) as well as product development; and a clear vision with leadership potential, assessing if a founder can manage a large team. He notes that founders can grow into their leadership roles, citing Jack Dorsey's development from Twitter's early stages to founding Square.
EVOLUTION OF THE STARTUP ECOSYSTEM
Reflecting on his two decades in investing, Conway observes significant changes. The cost of starting a company has dramatically decreased, and investors are now more willing to fund unproven ideas, a stark contrast to the early days requiring profitability. The shift from web to mobile-first development represents a major transformation. Furthermore, the core intellectual property has moved from algorithms to user design and interface, making user experience paramount in today's tech landscape.
THE SURPRISE AND SATISFACTION OF ENTREPRENEURIAL GROWTH
Conway's greatest surprise and satisfaction come from witnessing entrepreneurs mature at an accelerated pace when faced with rapid growth. He points to figures like Larry Page, Jack Dorsey, Mark Zuckerberg, and Ben Silberman, who, when their companies took off, were forced to rapidly develop management skills for thousands of employees while maintaining product focus. Helping these entrepreneurs navigate and adapt to this intense growth is the most rewarding aspect of his work.
Mentioned in This Episode
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Ron Conway's investment in Twitter stemmed from his trust in co-founder Evan Williams. After Williams felt responsible for the failure of his previous startup, Odio, and personally repaid investors, Conway pledged to invest in his next venture, which turned out to be Twitter.
Topics
Mentioned in this video
A social media platform where Ron Conway invested. Ben Silberman, the founder, demonstrated persistence and iterative product development, with SV Angel's team and Shaanan Fisher identifying its potential.
A company that Ron Conway invested in, prior to investing in Sean Parker's subsequent company, Plaxo.
Ron Conway's first company, founded in 1979. He used it to illustrate the significant changes in the startup funding climate since the early days.
An incubator company founded by Evan Williams, which incubated Odio. Ron Conway invested in Odio through Obvious Corp.
An angel investment firm where Ron Conway invests. They prioritize investing in people first and offer help with hard projects for their portfolio companies.
Mentioned as a successful social application that proved the trend of changing communication through apps. Ron Conway saw a pattern recognition with Snapchat, similar to Facebook and Twitter.
Ron Conway invested early, mentored by Sean Parker. He was impressed by Mark Zuckerberg's vision and the platform's rapid user growth, despite initial skepticism about social networking.
A company incubated at Obvious Corp that focused on the podcasting space. It did not perform well, and Evan Williams returned investors' money.
Mentioned as a social application that, along with Facebook, Twitter, and Snapchat, demonstrates the trend of apps changing communication behavior. SV Angel did not invest in Instagram.
A company Ron Conway advised on fundraising. He recommended choosing value-added investors like Jeff Jordan at Andreessen Horowitz, even if other investors offered higher valuations. They also used an early term sheet strategy during Airbnb's financing.
A social media platform that experienced rapid growth, facing challenges in keeping up with demand, as indicated by the 'fail whale'. Ron Conway invested early due to his trust in Evan Williams.
Invested in by Ron Conway's firm in 1998. Google later acquired Evan Williams' company, Blogger, facilitating Conway's connection with Williams.
A company founded by Jack Dorsey after leaving Twitter. Ron Conway received the first demo of Square, a credit card reader for iPhones, and observed Dorsey build it flawlessly.
Mentioned in the context of Ron Conway helping their startups with funding and M&A transactions, although specific details are often confidential.
An investor at Andreessen Horowitz whom Ron Conway recommended to Brian Chesky of Airbnb for his significant value-add to the company.
Co-founder of Twitter and founder of Blogger and Obvious Corp. Ron Conway invested in Twitter because of his positive experience with Williams' integrity after the failure of Odio.
A member of the SV Angel team who, along with David Lee, alerted Ron Conway to the potential of Pinterest.
Co-founder of Google. Mentioned as an example of a founder who matured rapidly to manage a large company and maintain product focus.
An investor on the East Coast who co-invested with SV Angel in Pinterest, identifying its potential early on. She believed it was a 'cool app' where people pin their aspirations.
CEO of Airbnb. Ron Conway advised him to prioritize investors based on value-add, citing Chesky's later gratitude towards Andreessen Horowitz and Jeff Jordan for their support.
Co-founder of Twitter. Ron Conway suggested talking to him when discussing the early days of Twitter and his growth as a leader, noting early management difficulties but subsequent success with Square.
Co-founder of Napster and early investor in Plaxo. He became president of Facebook and mentored Mark Zuckerberg, leading Ron Conway to engage with Facebook.
A member of the SV Angel team who, along with Kevin Carter, identified Pinterest as a promising app to Ron Conway.
Founder of Facebook. Ron Conway was impressed by Zuckerberg's early vision and confidence, particularly his ambitious user growth predictions.
A company founded by Evan Williams that was acquired by Google. This acquisition led to Ron Conway getting to know Evan Williams.
Sean Parker's second company, in which Ron Conway was an early investor. This connection led to Sean Parker inviting Conway to mentor him and Mark Zuckerberg at Facebook.
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