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Mark Suster on Maker Studios sale to Disney and his career as a VC
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Mark Suster has the monkey off his back. Nearly seven years into his career in venture capital, he's seen some amazing returns this year. AOL acquired Gravity for $90m. Apple picked up Burstly, the company behind Test Flight). Not least: Maker Studios sold to Disney for $500m. In this candid interview Mark goes long on both Maker - despite the popular perception that it was quickly running out of steam - and YouTube, even as it stands by its 55-45 revenue split with content creators. Who will be next out of the gate with video? His top picks are Amazon, followed by Twitter and Facebook in a tie. Plus, when to bootstrap, and a little history lesson on surviving hard times, informed by the financial crisis and Genghis Khan (no, really). Never miss an episode! Subscribe in iTunes: Audio (http://bit.ly/TwiStA) || Video (http://bit.ly/TwiStV) Follow on Twitter: @msuster @upfrontvc ============== Thanks to our sponsors. Click here to tweet your support (can edit before sending): http://ctt.ec/d0z7S Scott Walker at Walker Corporate Law. Scott loves startups and shows it, with fixed-fee pricing. Have a question? Email him directly, scott@walkercorporatelaw.com, and tell him Jason sent you. and by New Relic. Now with New Relic Insights. Ask real language questions to get really smart answers about your business. Sign up at http://newrelic.com/twist to try it out and get your free This Week in Startups tshirt! ============== Follow on Twitter: @jason @twiStartups Launch Ticker: http://launch.co Launch Festival: http://festival.launch.co Special thanks to the members of the TWiST Backchannel Program! Highlights: 00:33 - cold open 1:23 - intro 2:58 - MS: I've been a VC since 2007. Going on 7 years. I actually didn't write a check for a year and a half. 4:08 - JC: People don't remember exactly how bad it was. What's the effect on a VC? 5:30 - JC: what should be in that plan? 5:31 - MS: avoid fixed costs you can't get out of. What I like to tell people is raise money when it's available. 11:30 - Walker ad read - 13:20 - MS: First, people get caught on "are you losing money?" there's a tension between growth and profit. Investors only care about growth and margin. 14:25 - MS: At Maker we have 50 engineers. Do the math. The company was on a 9-figure revenue run rate. I believe it's the fastest company growing in LA. 16:40 - JC: Why sell the company if growing this well? 16:55 - MS: Here's a company that acquired Marvel, Pixar, etc. It owns some of the best assets in the world and when that company says "we've decided that shortform video is tremendously important to the future of the company," you take the call. 18:05 - JC: It felt like YouTube didn't want the MCNs to exist anymore. When you're an investor and you see YouTube stealing...what are board meetings like? 19:35 - MS: I look at it differently. YouTube bought Next New Networks. They want to serve creators directly. YouTube has no problem if 50% of our business is on YouTube. You need to fish where all the fish are, and they're all on YouTube. 22:40 - JC NewRelic ad read - 24:40 - JC: You sound magnanimous. You were frustrated with YouTube. 24:53 - MS: I'm always nuanced, so let me say I will invest more in YouTube. 26:05 - JC: Who would you most like to see get into the video business and take YouTube headon? 28:00 - JC: Don't you think they should have given a better deal to Maker than anyone off the street with a cat video? 28:15 - MS: I think one should get volume discounts....they'll hold their ground until they have competition. I believe it'll be here in the next 2 or 3 years. 29:28 - MS: The next obvious competitors are Twitter and Facebook in my mind. 30:04 - MS: Think about why video-based retail. [.....] If you put something in YouTube, it's in a YouTube wrapper. It's only a matter of time before that video is outside of its wrapper on FB or TWitter and they are going to sell the pre-roll. 31:28 - JC: Ellen. What impact would she, moving to Twitter's platform, have? 32:25 - MS: Not an if, it's a when. Competition is good for all of us. Competition drives innovation. Imagine a world in which there was only an iPhone and no Android. Apple is like China. 37:45 - MS: I would call the exits doubles. Gravity acquired by AOL. I would say I've had exits but Maker has returned significantly more than all the investments I've done in 5 years. 53:31 - MS: EntrepreneurShit. What I've tried to do is to give the realism of startups. 56:20 - MS: The job of the CEO is to be chief psychologist. People will fight. I've noticed with some of my companies in super stressful times that I've had to pull them out emotionally and lift them up. 57:33 - JC: What's the most common fight between co-founders? 1:00:52 - video question 1:01:35 - Should someone w/ a functional team, product, clients go to accelerator or funding? 1:02:40 - JC: What do you wish you'd known when you started? 1:09:33 - How much money does a VC make? 1:12:03 - close
Segments Timeline
The Journey of a VC
Mark Suster shares his journey as a venture capitalist since 2007, detailing the challenges he faced in his early years, including a year and a half without making any investments. He reflects on the market conditions during the financial crisis and how they shaped his approach to venture capital, emphasizing the importance of understanding market cycles.
"today's episode of this weekend startups is brought to you by Walker corporate law a boutique Law Firm specializing in the representation of entrepreneurs visit them at Walker corporat law.com and by ..."
The Journey of a VC
Mark Suster shares his journey as a venture capitalist since 2007, detailing the challenges he faced in the early days of his career. He reflects on the lack of deals and the impact of the financial crisis on his investments, emphasizing the importance of understanding market cycles for entrepreneurs.
"today's episode of this weekend startups is brought to you by Walker corporate law a boutique Law Firm specializing in the representation of entrepreneurs visit them at Walker corporat law.com and by ..."
Planning for Recessions
Suster discusses the necessity for entrepreneurs to plan their businesses with a long-term perspective, accounting for potential recessions. He highlights the importance of avoiding fixed costs that could jeopardize a startup's survival during tough economic times.
"you've been a VC for how long I've been a VC since 2007 so going on seven years right um as I said on my blog um I actually didn't write a check for a year and a half so I joined officially September ..."
Planning for Recessions
In this segment, Mark discusses the necessity for entrepreneurs to plan their businesses with a long-term perspective, anticipating economic downturns. He highlights the importance of avoiding fixed costs that could jeopardize a startup's survival during tough times, using historical examples to illustrate his points.
"you've been a VC for how long I've been a VC since 2007 so going on seven years right um as I said on my blog um I actually didn't write a check for a year and a half so I joined officially September ..."
The Impact of Market Corrections
Mark explains how market corrections affect venture capitalists, detailing the triage process of assessing investments during downturns. He shares insights on the psychological impact of financial crises and the importance of being prepared for extreme market events.
"Express um and I also tell people that what should be in that plan um well I think you need to be careful about not locking in super big fixed costs that you can't recover from fixed cost being what s..."
The Impact of Market Corrections
Mark elaborates on the effects of market corrections on venture capitalists, explaining how they must shift focus to triage their investments during downturns. He shares personal experiences from the 2008 financial crisis, emphasizing the need for VCs to be proactive in managing their portfolios and securing additional funding for struggling companies.
"Express um and I also tell people that what should be in that plan um well I think you need to be careful about not locking in super big fixed costs that you can't recover from fixed cost being what s..."
Lessons from History
Suster draws parallels between historical events, such as the Black Plague and financial crises, to illustrate how global economies can collapse. He emphasizes the importance of understanding history to prepare for potential future downturns.
"because when the Market's hit it also hits LPS the people invest in VC funds so if you've raised a new fund and you're not overextended on your investment you're fine so we at up front we were lucky h..."
Lessons from History
Mark draws parallels between historical events and modern economic challenges, recommending books that provide insights into how global trade and economies can collapse. He emphasizes the importance of understanding these lessons to prepare for potential future crises.
"because when the Market's hit it also hits LPS the people invest in VC funds so if you've raised a new fund and you're not overextended on your investment you're fine so we at up front we were lucky h..."
The Maker Studios Story
Mark begins discussing Maker Studios, addressing misconceptions about its financial health prior to its acquisition by Disney. He highlights the unexpected nature of the sale and the challenges faced by the company within the troubled YouTube ecosystem, setting the stage for a deeper exploration of its success.
"making of the modern world the making of the modern world there's your audible choice for the day there it is on Audible it's very good very audible's not sponsoring this episode but I love Audible an..."
The Maker Studios Story
Mark Suster begins to discuss Maker Studios, addressing misconceptions about its financial health prior to its acquisition by Disney. He sets the stage for a deeper exploration of the company's journey and the unexpected nature of the sale.
"making of the modern world the making of the modern world there's your audible choice for the day there it is on Audible it's very good very audible's not sponsoring this episode but I love Audible an..."
Growth vs. Profit
In this segment, Mark explains the tension between growth and profitability in the startup world. He emphasizes that while investors prioritize growth, it often requires significant upfront investment, which can lead to temporary losses. This insight is crucial for understanding the dynamics of venture capital.
"this company and how it was able to thread the needle so let's State a couple things first of all um I think it's important and I try to educate journalists about this all the time CU everyone gets ca..."
Growth vs. Profit
Suster elaborates on the tension between growth and profitability in startups, explaining that investors prioritize growth. He discusses how Maker Studios navigated this balance and the implications for its valuation.
"this company and how it was able to thread the needle so let's State a couple things first of all um I think it's important and I try to educate journalists about this all the time CU everyone gets ca..."
The Value of High Growth
Mark emphasizes the significance of high growth with strong gross margins as the most attractive proposition for investors. He uses examples from the industry to illustrate this point, setting the context for Maker Studios' appeal.
"your viewers may not immediately pick up on is why is there ition between profit and growth yeah why because in order to get growth you often have to invest in advance in Engineering in sales teams in..."
Growth vs. Profit: The VC Perspective
In this segment, Mark Suster elaborates on the tension between growth and profitability in startups. He explains that investors prioritize growth, particularly in high-margin businesses, and discusses the financial strategies that can lead to sustainable growth in the tech industry.
"most valuable thing that there is to investors an example of a one of the best would be what well I'm sure Uber yeah must be on a tear growth-wise and I'm sure well let me explain just one thing Jason..."
Why Sell Maker Studios?
Suster answers the question of why Maker Studios chose to sell despite its growth trajectory. He discusses the strategic importance of aligning with a major player like Disney and the potential for future opportunities in the short-form video space.
"million or more to not sell the company really yeah so why did you sell the company if was growing this well that's a little bit of a tell like was there some risk factor or is there some thing people..."
Maker Studios: A Fast-Growing Company
Suster shares insights into Maker Studios' impressive growth trajectory, revealing that the company was consistently generating significant revenue. He highlights the importance of investing in infrastructure and talent to support rapid growth in a competitive market.
"year-over year so over a million dollars a month in Revenue incredible no no no no did I quote that wrong uh said nine figure a month nine figure then I'm wrong sorry it seven figure a month nine figu..."
The Decision to Sell Maker Studios
Mark Suster discusses the strategic decision behind selling Maker Studios to Disney, despite its rapid growth. He emphasizes the importance of aligning with a company that recognizes the value of short-form video and the potential for future growth in the media landscape.
"course there's a lot of yard barkers who are saying oh the company's about to go under well let's look at the facts we had just raised $72 million sure right 72 doesn't evaporate no I mean even if you..."
YouTube's Strategy
Mark shares his perspective on YouTube's approach to multi-channel networks (MCNs) and its desire to serve creators directly. He discusses the implications of this strategy for the future of content creation and distribution.
"doing you take the call okay let's talk about the YouTube relationship yeah because you've written about it you talked about it in fact the two of us were kind of like the voices of like hey maybe You..."
YouTube's Relationship with MCNs
In this segment, Suster addresses the evolving relationship between YouTube and Multi-Channel Networks (MCNs) like Maker Studios. He discusses the challenges MCNs face as YouTube integrates their innovations and the implications for creators and investors.
"of all it's Management's decision whether or not to sell and investors I think serve at the pleasure of management and as long as inv Founders you mean yeah well it's not always Founders yeah sometime..."
The Future of Video Platforms
Suster speculates on potential competitors to YouTube, naming Twitter and Facebook as key players. He discusses the evolving landscape of video content and the opportunities for new entrants in the market.
"that's a consensus opinion I think I I look at it slightly differently Jason which is first of all you may know you do know uh YouTube bought next new networks yep and the whole idea was to develop in..."
The Role of Competition
Mark discusses the benefits of competition in the video space, emphasizing how it drives innovation. He draws parallels to the smartphone market, highlighting the importance of having multiple players to foster growth and creativity.
"going to go right here I'm going to cross out all the copy all you need to know is new relic.com twist uh where you can get the free t-shirt from New Relic because that's how like deep into the this w..."
YouTube's Strategy and Market Position
Suster provides a nuanced view of YouTube's strategy, explaining how the platform aims to serve creators while also competing with MCNs. He discusses the importance of building an audience on YouTube and the challenges of monetizing that audience effectively.
"about the YouTube relationship yeah because you've written about it you talked about it in fact the two of us were kind of like the voices of like hey maybe YouTube could do a little better there was ..."
The Future of Video Platforms
Mark Suster shares his thoughts on the future of video platforms and the potential for competition to emerge. He discusses the importance of innovation and how companies like Amazon could disrupt YouTube's dominance in the video space.
"what do you think what are the board meetings like well obviously I have a slightly different view on what am I right am I wrong yeah tell me um because that's a consensus opinion I think I I look at ..."
The Innovator's Dilemma for Google
Mark Suster explores the concept of the innovator's dilemma as it applies to Google and YouTube. He argues that YouTube's dominance may lead to complacency, creating opportunities for new entrants to disrupt the market and challenge its current business model.
"every VC has said no effing way that's great that's awesome all right but why are all these VCS saying no effing way why did they see not see the opportunity because let's face it Machinima having pro..."
Building a Sustainable Video Business
In this segment, Suster outlines the key components of building a sustainable video business. He emphasizes the need for diverse revenue streams, original content production, and strategic partnerships to enhance profitability and growth.
"to build a sustainable business so let's look at the margin they take 45% most Talent takes about 70% so if you have formats that are just I'm repackaging existing Talent selling through YouTube you'r..."
The Future of Video Platforms
Suster concludes by discussing the potential for new players in the video space, emphasizing the importance of innovation and competition. He highlights the need for established platforms to adapt to changing consumer behaviors and preferences in order to remain relevant.
"know that it's 95 minutes out of 100 okay well let's talk about Twitter Facebook and all these other ones who who would you most like to see get into the video business and take YouTube head on and wh..."
The Future of Video Platforms: Amazon, Twitter, and Facebook
Mark Suster outlines his predictions for the future of video platforms, naming Amazon, Twitter, and Facebook as key competitors to YouTube. He discusses the infrastructure these companies possess and their potential to host short-form content, emphasizing the importance of competition in driving innovation within the industry. This segment provides insights into the shifting dynamics of video content distribution.
"today is encouraging short form content to be on a platform that other people uh consume the video number one and number two is they're not selling ads for you so when you get started if you don't hav..."
Leveraging Brand Integration and Merchandise
Suster discusses the importance of brand integration and merchandise sales as revenue streams for video companies. He highlights how these strategies can significantly improve profit margins compared to traditional ad revenue models.
"we get back from break let's talk about um the YouTube competitors that are coming and we'll finish up that discussion um okay listen New Relic uh saved my ass I I I would look at all the copy here bu..."
Video Advertising: The Emotional Connection
In this segment, Suster highlights the effectiveness of video advertising in creating emotional resonance with consumers. He contrasts video with traditional banner ads and discusses the unique value of intent-driven search advertising. This analysis underscores the growing importance of video as a medium for storytelling and brand engagement.
"Amazon now right you have now the Amazon new TV platform that they're launching to compete with Roku I think they originally are just going to sell long form video on that but how long will it be befo..."
Investing in YouTube: A Nuanced Perspective
Mark Suster discusses his willingness to invest more in YouTube despite the skepticism from other VCs. He highlights the challenges faced by MCNs like Machinima and emphasizes the importance of having a solid strategy for growth and differentiation in the competitive landscape of online video. Suster argues that YouTube should be viewed as a channel rather than a standalone business, and he critiques the current revenue-sharing model.
"you you you want to maintain the relationship with YouTube or you you were kind of frustrated let me say a couple things Jason I feel like you're you're sugar coding a little I'm not respect no I'm no..."
The Innovator's Dilemma: YouTube's Market Position
Suster explains the concept of the innovator's dilemma as it applies to YouTube's dominance in the video space. He suggests that YouTube's strong market position may lead to complacency, inviting competition from companies like Amazon, which has the infrastructure to challenge YouTube's supremacy in video hosting and advertising.
"know that it's 95 minutes out of 100 okay well let's talk about Twitter Facebook and all these other ones who who would you most like to see get into the video business and take YouTube head on and wh..."
The Evolution of Video Distribution
Mark Suster discusses how video content is currently wrapped in YouTube's ecosystem and the potential for that content to be distributed across other platforms like Facebook and Twitter. He predicts that as competition increases, these platforms will begin to monetize video content more aggressively, reshaping the landscape of online video. This segment explores the future of video distribution and monetization.
"something it works it works better than banners much better than banners than search or or equal well search has something that's unique to it Jason which you know and maybe some of your viewers don't..."
Ellen DeGeneres and the Future of Video on Twitter
Suster speculates on the impact of high-profile figures like Ellen DeGeneres moving their video content to platforms like Twitter. He discusses the potential for these moves to disrupt the current video landscape and the implications for YouTube. This segment highlights the significance of celebrity influence in shaping the future of video content distribution.
"and also it seems to me like somebody like say Ellen degenerous who has 28 million followers on uh 28 million followers Ellen generous has on Twitter I was told kind of Through the Grapevine that Elle..."
Amazon: The Next Video Competitor
Mark Suster identifies Amazon as a potential competitor to YouTube, citing its existing infrastructure and ad business. He discusses how Amazon's capabilities could allow it to enter the short-form video market, posing a significant challenge to YouTube's current model and revenue-sharing practices.
"today is encouraging short form content to be on a platform that other people uh consume the video number one and number two is they're not selling ads for you so when you get started if you don't hav..."
The Future of Video Advertising
Suster elaborates on the growing importance of video advertising, emphasizing its effectiveness in creating emotional resonance with consumers. He discusses how platforms like Twitter and Facebook are poised to capitalize on this trend, potentially disrupting YouTube's advertising model.
"um so Amazon you think would be the perfect competitor yeah let's go down the list because they already have the infrastructure the next obvious competitors are Twitter and Facebook let's do each one ..."
Competition Drives Innovation in Video Platforms
In this segment, Suster argues that competition among video platforms is essential for innovation. He draws parallels between the smartphone market and the video industry, suggesting that without competition, platforms like YouTube could become complacent. This discussion emphasizes the need for a diverse ecosystem to foster creativity and progress in video content.
"I would argue including them because why well I mean you think they're out of touch competition drives Innovation and I mean imagine a world in which there was only an iPhone and no Android right you ..."
Ellen DeGeneres and the Future of Video on Twitter
In this segment, Suster speculates on the impact of high-profile figures like Ellen DeGeneres moving their video content to platforms like Twitter. He discusses the implications of such moves for YouTube and the competitive landscape, suggesting that competition will drive innovation and benefit all players in the market.
"in uh purple shoes yeah um I'm showing an interest or an intent to purchase and intent to per purchase turns out to be the most profitable business probably that exists in the world right it's like re..."
YouTube's Investment Strategy: A Critical Look
Mark Suster critiques YouTube's investment strategy, questioning why the platform has not invested in third-party tools and analytics for creators. He discusses the implications of this approach for the ecosystem and highlights the importance of supporting content creators beyond just providing a platform. This segment sheds light on the challenges faced by creators in the YouTube ecosystem.
"right we have a YouTube video from a YouTube question from the chat room are you kidding okay why oh I see I thought it was an actual video why won't YouTube invest grant money to other companies tool..."
Epoxy TV: Bridging Video Distribution Gaps
Suster introduces Epoxy TV, a tool designed to help video creators distribute their content across multiple platforms. He explains how it enhances viewer engagement by guiding audiences to additional content. This segment showcases innovative solutions aimed at improving video distribution and maximizing audience reach.
"really simple I believe in a world of fragmented video I believe way more is going to go on Facebook and Twitter Yahoo and other platforms and in a world in which I just upload my videos to YouTube an..."
Apple's Control and the Need for Competition
Mark Suster critiques Apple's control over its ecosystem, comparing it to a dictatorship. He argues that competition is essential for innovation and that a lack of it can lead to stagnation. Suster uses the analogy of the smartphone market to illustrate how competition fosters better products and services.
"I would argue including them because why well I mean you think they're out of touch competition drives Innovation and I mean imagine a world in which there was only an iPhone and no Android right you ..."
Epoxy TV: Bridging Video Distribution Gaps
Suster introduces Epoxy TV, a tool designed to help video producers distribute their content across multiple platforms. He explains how it enhances viewer engagement by guiding audiences through a series of videos, thus increasing overall consumption and providing a competitive edge in a fragmented video landscape.
"much but I've invested in a tools company that works inside of the YouTube ecosystem it's called epoxy TV epoxy TV pull it up Jun my thesis on epoxy TV is really simple I believe in a world of fragmen..."
The Impact of High-Quality Video on Social Platforms
In this segment, Suster discusses the differences in video quality across platforms like YouTube, Vine, and Instagram. He emphasizes the importance of high-quality content and how tools like Epoxy TV can help creators leverage their best material across various social media. This analysis highlights the evolving standards for video content in the digital landscape.
"consumption because YouTube's never going to make a tool that goes across platform well that's not even YouTube That's Facebook right so right but I saying YouTube would never make a tool that says cl..."
Mark Suster's Exits: Singles vs. Doubles
Mark Suster reflects on his venture capital career, discussing the nature of exits and returns. He compares smaller exits to singles and doubles, emphasizing that while he has had exits, the Maker Studios acquisition stands out as a significant return compared to his previous investments. This segment highlights the importance of understanding investment returns in venture capital.
"Disney uses it Warner uses it Machinima uses it maker Studio uses it style Hall uses it it uh me tooo uses it um let's talk about some of your other Investments sure it was really great for you to get..."
Mark Suster's Investment Journey
Reflecting on his career as a VC, Suster shares insights into his investment strategy and the significance of his recent exits. He discusses the returns from Maker Studios and Gravity, emphasizing the importance of identifying promising startups and supporting them through their growth phases.
"consumption because YouTube's never going to make a tool that goes across platform well that's not even YouTube That's Facebook right so right but I saying YouTube would never make a tool that says cl..."
The Measure of a Good VC
In this segment, Mark Suster addresses the question of what makes a good venture capitalist. He discusses his ability to identify deals, work with entrepreneurs, and secure downstream investors. Suster emphasizes that while he has proven his skills in many areas, the ultimate measure of success in VC is the returns generated for investors, which often take years to materialize.
"and it it just you know it so Jason this is how I said it like someone asked me on Kora is Mark suster a good VC or not right I saw that answer the thing I love about Kora and the thing I hate about s..."
The Measure of a Good VC
In this segment, Mark Suster addresses the qualities that define a good venture capitalist. He discusses his ability to identify promising deals, work with entrepreneurs, and secure downstream investors, while also acknowledging the critical metric of returns that investors use to evaluate his performance.
"and it it just you know it so Jason this is how I said it like someone asked me on Kora is Mark suster a good VC or not right I saw that answer the thing I love about Kora and the thing I hate about s..."
Understanding VC Metrics: DPI and TVPI
Mark Suster explains two critical metrics in venture capital: DPI (Distributions Per Invested Capital) and TVPI (Total Value Per Invested Capital). He clarifies how these metrics relate to cash returns and the importance of internal rate of return (IRR) for investors. This segment provides valuable insights into how venture capitalists measure their performance and the significance of quick returns.
"the returns will come but here's the problem Jason is that great Returns come in year 7 8 9 10 right if I'm selling in years 1 2 3 and four it's probably singles and doubles and people Market the hell..."
Understanding VC Metrics: DPI and TVPI
Mark Suster explains two key metrics in venture capital: DPI (Distributions per Invested Capital) and TVPI (Total Value per Invested Capital). He clarifies how these metrics relate to cash returns and the importance of internal rate of return (IRR) for limited partners, emphasizing the significance of quick returns for reinvestment opportunities.
"in year 7 8 9 10 right if I'm selling in years 1 2 3 and four it's probably singles and doubles and people Market the hell out of their singles and doubles like they're the second coming but LPS are l..."
The Importance of Revenue in Startups
Mark discusses the necessity of robust revenue growth in startups, using DataSift and Maker Studios as examples. He contrasts these companies with others that rely solely on fundraising without generating revenue, highlighting the importance of sustainable business models in venture capital.
"about your performance as a slightest no you knew it work out so there are two metrics for a VC that most people don't know right DPI and tvpi okay DPI I don't even know these DPI is distributions per..."
DataSift: A Real-Time Data Processing Platform
Mark Suster discusses his investment in DataSift, a company specializing in real-time data processing. He highlights its capabilities in analyzing vast amounts of data, particularly from social media platforms like Twitter. This segment showcases the potential of data analytics in understanding consumer behavior and the growing importance of data-driven decision-making in business.
"know right DPI and tvpi okay DPI I don't even know these DPI is distributions per invested capital okay tvpi is total value per invested Capital what it DPI means is realizations or exits or really re..."
The Controversy of Anonymous Apps
In this segment, Mark Suster critiques the Secret app, which allows users to post anonymously. He expresses concerns about the potential for misuse and the negative impact of anonymity on social behavior. Suster shares his experiences with online bullying and the challenges of managing reputation in the digital age, emphasizing the need for accountability in online interactions.
"do it with a visual query Builder you literally just drag build it's pretty and you drag these slides and out pops a data set and by the way if you tweeted a negative article about Mitt Romney but did..."
Critique of Anonymous Apps: The Secret App
Mark Suster shares his critical perspective on the Secret app, which allows anonymous posting. He discusses the potential for harmful behavior and cyberbullying on such platforms, emphasizing the need for accountability and the negative impact of anonymity on social interactions.
"do yes that is our main competitor but what we allow you to do is if you want to find uh let's say African-American people in the south of Florida who are Republican who are between 20 and 45 who have..."
The Dark Side of Anonymity
Mark Suster continues his discussion on the Secret app, highlighting the dangers of anonymous platforms that can foster bullying and harassment. He shares personal anecdotes about being targeted online and the implications for mental health. This segment underscores the ethical responsibilities of tech companies in creating safe environments for users.
"to along with whisper which is in La here allows you to anonymously post stuff which is not tied to you at all and some people say it's not truly anonymous because they tie it to your mobile phone num..."
The Dark Side of Anonymity
In this segment, Mark elaborates on the consequences of anonymous platforms like Secret and Whisper. He shares personal experiences of being targeted and discusses the broader implications of anonymity in fostering negative behavior, particularly among youth.
"in data sift were no in data sift in inoka in Maker Studios like real Revenue businesses so I felt okay you uh put in a slight um uh piece there about Secret app for people who don't know explain what..."
Silicon Valley's Responsibility
Mark Suster challenges the tech industry's perception of itself as a force for good. He argues that platforms can amplify negative behaviors and that founders should consider the societal impact of their products, especially when they cater to the worst aspects of human nature.
"bag someone wrote about me and I'm okay with it I I Amplified it Jason someone said Mark suster is a total fraud he's the exact opposite of how he writes on his blog okay fine okay I Amplified it beca..."
Silicon Valley's Ethical Dilemma
Mark Suster reflects on the broader implications of anonymity in Silicon Valley, questioning the motivations behind creating apps like Secret. He argues that such platforms can reveal the darker aspects of human behavior and challenges the tech community to consider the societal impact of their innovations. This segment calls for a more responsible approach to technology development.
"life have you seen me yeah you know yeah and I'm a big teddy bear so so someone could punch his way out of a brown paper bag someone wrote about me and I'm okay with it I I Amplified it Jason someone ..."
The Ethics of Building Apps
Mark discusses the ethical considerations in app development, particularly for platforms that allow anonymous interactions. He questions the motivations behind creating such apps and emphasizes the need for founders to reflect on the potential harm their products may cause.
"from being posted but I flagged it I flagged it as inappropriate and I called a friend of mine who told me it was out there cuz I don't have secret on my phone and asked him to flag it and a few more ..."
The Need for Caution in Tech Development
In this segment, Mark Suster emphasizes the importance of caution when developing new technologies, particularly those that can amplify negative behaviors. He discusses the responsibility of founders to consider the potential consequences of their products and the need for ethical considerations in tech innovation. This segment advocates for a more thoughtful approach to product design.
"meet at a conference anywhere to my phone book cuz I just take my stack of business I have thousands and thousands of people who I in my phone book so yeah a friend in so much as it's in my contact bo..."
The Impact of Cyberbullying on Youth
Mark Suster addresses the serious issue of cyberbullying and its effects on young people. He shares insights on how anonymous platforms can exacerbate bullying and lead to tragic outcomes. This segment highlights the urgent need for awareness and preventive measures to protect vulnerable individuals in the digital landscape.
"whisper doesn't have this like broadcast at your phone book and they have people reviewing all the posts and making sure that stuff isn't going on or something close to that something close to all whe..."
The Impact of Cyberbullying
In this segment, Mark addresses the serious issue of cyberbullying facilitated by anonymous platforms. He highlights the potential for real-world consequences, including mental health crises, and stresses the importance of creating safer online environments for users.
"think it's um it brings out our worst self and honestly what I will say you to wonder about a Founder who this is what I think and I again I don't want to beat up on any founder because I'm an angel i..."
The Role of Founders in Shaping Culture
Mark concludes by discussing the responsibility of founders in shaping the culture of their platforms. He emphasizes that the values and intentions behind a product can significantly influence its impact on society, urging entrepreneurs to prioritize ethical considerations in their innovations.
"lowest forms of their worst behavior are devils my my my example was this if you see someone in a grocery store and they cut you off and they say oh I'm really sorry you just let them pass and you'd s..."
The Role of Responsibility in Tech
Mark Suster concludes his thoughts on the ethical responsibilities of tech companies, particularly regarding the impact of their platforms on society. He argues that the motivations behind creating certain apps should be scrutinized, and emphasizes the need for a balance between innovation and social responsibility. This segment calls for a more conscientious approach to technology.
"I think that they got caught in a whirlwind because it became very popular but it speaks to a broader thing Jason which is Silicon Valley many times has this perception that they're above it all that ..."
The Need for Mental Health Support in Startups
Mark Suster emphasizes the importance of mental health support for entrepreneurs, especially during stressful times. He discusses the pressures faced by startup founders and the need for open conversations about mental health within the entrepreneurial community.
"every feature to grow as fast as possible without thinking about what that speed does sure um but if you're building a product and you feel it necessary to hire the person who handled the suicide issu..."
The Dark Side of Anonymous Platforms
Mark Suster discusses the serious issue of cyberbullying on anonymous platforms and its tragic consequences, including suicides. He emphasizes the need for awareness around the mental health impacts of such platforms, particularly on vulnerable individuals, and reflects on his own experiences with bullying.
"bullying that was created through an anonymous platform like that that was growing like a weed and of course bullying occurs in the real world but it gets accelerated with these tools and they were re..."
The Responsibility of Platform Creators
Suster critiques the rapid growth of social media platforms without adequate consideration for user safety. He shares a personal anecdote about being added to a controversial Facebook group, highlighting the need for accountability among platform creators regarding the emotional and psychological effects of their products.
"right we've seen that happen yeah exactly to people we know yeah I mean but imagine if that was the case an Eco mom was like oh my God you know like not if it's the case Jason when it's the case yeah ..."
Realism in the Startup Journey
In this segment, Suster shares insights from his blog about the realities of startup life, including the emotional toll it can take on founders. He discusses the importance of being honest about the struggles of entrepreneurship and the need for a supportive environment.
"I guess let's talk about since we're on the subject you know and um jod and you wrote about jod and just Founders and the pressure they're under and now that you've invested in them and you've bid one..."
Navigating Mental Health in Startups
In this segment, Suster addresses the mental health challenges faced by entrepreneurs, including anxiety and depression. He shares insights on how to support founders during stressful times and the importance of open discussions about the realities of startup life.
"every feature to grow as fast as possible without thinking about what that speed does sure um but if you're building a product and you feel it necessary to hire the person who handled the suicide issu..."
Coping Mechanisms for Startup Stress
Mark Suster opens up about his personal coping mechanisms for stress, including eating and drinking. He discusses the common struggles entrepreneurs face and the importance of addressing these issues openly to foster a healthier startup culture.
"um and felt the stress but it was it was travel it was airports a couple beers at an airport a beer when you saw your client two beers with the new recruiting yeah all of a sudden you got six beers in..."
The Role of a CEO as Chief Psychologist
Suster explains the dual role of a CEO as both a leader and a psychologist, emphasizing the need to manage team dynamics and support employees emotionally. He shares experiences from his ventures, highlighting the importance of addressing interpersonal conflicts within teams.
"it's pretty soulless but I will tell you this is that I said the job of a CEO is to be Chief psychologist meaning you hire eight or 10 great people beneath you and if you don't hire eight or 10 great ..."
The Realities of Startup Stress
Mark Suster opens up about his personal struggles with stress and unhealthy coping mechanisms during his early career. He discusses the importance of acknowledging the pressures of entrepreneurship and the need for realistic portrayals of startup life.
"I guess let's talk about since we're on the subject you know and um jod and you wrote about jod and just Founders and the pressure they're under and now that you've invested in them and you've bid one..."
Understanding Co-Founder Conflicts
In this segment, Suster discusses the common causes of conflicts between co-founders, including differing personal circumstances and risk tolerances. He emphasizes the importance of understanding each other's motivations and aligning goals to prevent disputes.
"important all right co- fighting co-founder fighting yeah what do you think is the cause of most fighting um between co-founders well let's start with a few basic things which is often co-founders don..."
The Role of a CEO as Chief Psychologist
Suster explains the dual role of a CEO as both a leader and a psychologist, emphasizing the importance of emotional support for team members. He discusses the dynamics of co-founder relationships and the common conflicts that arise in startups.
"um and felt the stress but it was it was travel it was airports a couple beers at an airport a beer when you saw your client two beers with the new recruiting yeah all of a sudden you got six beers in..."
The Co-Founder Mythology
Mark Suster challenges the traditional notion of co-founders, advocating for a more flexible approach to founding teams. He shares insights from his blog post on the co-founder mythology, suggesting that hiring co-founders can lead to better alignment and decision-making.
"but you're still in charge you still control voting you should treat them like a Founder be open with your financials and how much Equity you have how much they have involved them in decision- making ..."
Understanding Co-Founder Conflicts
In this segment, Suster delves into the reasons behind co-founder conflicts, including personal changes and differing risk tolerances. He shares insights from his experiences and stresses the importance of aligning incentives among co-founders.
"Game and I know that sounds stupid but honestly you really do and you have to choose to your point about secret and other apps you have to choose something you're deeply passionate about and otherwise..."
The Co-Founder Mythology
Mark Suster challenges the traditional notion of co-founders, advocating for a more flexible approach to founding teams. He discusses the importance of hiring co-founders and maintaining control over equity distribution to prevent conflicts.
"very personal conversations and having to lift them up emotionally and it's important all right co- fighting co-founder fighting yeah what do you think is the cause of most fighting um between co-foun..."
Bootstrapping vs. Accelerators
Suster provides advice to a startup founder on whether to bootstrap their business or seek accelerator funding. He discusses the importance of understanding product-market fit and the implications of raising venture capital early in a startup's journey.
"it's interesting like you're talking to me as an entrepreneur because I always try to have a great founding team yes and I don't feel the need at Le especially at this point in my career to monopolize..."
Bootstrapping vs. Accelerators
Suster provides advice to a startup founder on whether to bootstrap or seek accelerator funding. He emphasizes the importance of understanding product-market fit before raising significant capital and the implications of taking on venture funding.
"it's interesting like you're talking to me as an entrepreneur because I always try to have a great founding team yes and I don't feel the need at Le especially at this point in my career to monopolize..."
The Challenges of Securing Funding
In this segment, Suster reflects on the difficulties of securing funding and the importance of understanding market dynamics. He shares insights on how to approach investors and the significance of demonstrating product-market fit before seeking larger investments.
"Venture Capital all right so let's any feedback you let's assume here that the person has a functioning product and some clients should a person with a functioning team product and clients go into an ..."
The Challenges of Venture Capital
In this segment, Suster reflects on the challenges of venture capital, including the difficulty of achieving successful exits. He shares insights on the importance of understanding market dynamics and the realities of startup valuations.
"Venture Capital all right so let's any feedback you let's assume here that the person has a functioning product and some clients should a person with a functioning team product and clients go into an ..."
Lessons Learned from Five Years of Investing
Mark Suster shares valuable lessons learned from his five years in venture capital, including the challenges of driving returns and the complexities of achieving successful exits. He emphasizes the importance of understanding market conditions and the realities of startup valuations.
"you know that standard question it is easy to write checks it's the easiest part of our business it's the thing we brag about the most um it is very hard to drive returns we read Tech crunch or inside..."
The Rise of Mini VCs
Mark Suster discusses the emergence of mini VCs and syndicates in the venture capital ecosystem. He explains how these smaller investors can complement traditional VCs by funding early-stage startups, allowing for a wider top-end funnel of investment opportunities. Suster highlights the benefits of this trend for both entrepreneurs and established VCs, fostering a healthier investment landscape.
"think normally a venture back company raising a million to 2 million should be raising in the $4 to $6 million pre-money range and I see something I just love I'll pay eight pre like if I feel like th..."
Investing in a Competitive Market
Mark Suster discusses the current investment landscape, emphasizing the need to remain active in the market despite high valuations. He shares his approach to investing and the importance of recognizing innovation in potential startups.
"you know that standard question it is easy to write checks it's the easiest part of our business it's the thing we brag about the most um it is very hard to drive returns we read Tech crunch or inside..."
The Rise of Mini VCs
Mark Suster addresses the emergence of mini VCs and syndicates in the venture capital space. He explains how these smaller investors can complement traditional VCs by funding early-stage startups, allowing VCs to focus on more qualified opportunities. Suster highlights the benefits of this trend for both entrepreneurs and venture capitalists.
"like something that doesn't have real customer traction real proof or whatever so I'll pay the top end of normal uh final question know you love nval and angelist you've been very positive about that ..."
Understanding Fund Overlap
In this segment, Mark Suster clarifies the concept of overlapping funds in venture capital. He explains the potential conflicts that arise when a VC invests from multiple funds in the same company and discusses the implications for board members. Suster provides insights into how overlapping commitments can affect decision-making and the dynamics of venture capital investments.
"um I think that people like you and me are very complimentary right because you're going to write many checks and you don't have the time or capacity to sit in the board meeting no and deal with the c..."
The VC Compensation Landscape
Mark Suster sheds light on the compensation structure for venture capitalists, detailing the wide range of salaries based on fund size and experience. He discusses the financial realities for junior partners versus senior partners in established funds, providing a candid look at what VCs earn and the factors influencing their compensation.
"know we've added new partners we added Greg bettinelli we added hame Watt and we will continue to add partners and so all that can be found at upfront upfront.com you got upfront.com oh yeah nicely do..."
Understanding Overlapping Funds
In this segment, Mark Suster clarifies the concept of overlapping funds in venture capital. He discusses the implications of investing from multiple funds in the same startup and the potential conflicts that can arise. Suster provides insights into how VCs manage their commitments across different funds and the importance of maintaining clear boundaries.
"um I think that people like you and me are very complimentary right because you're going to write many checks and you don't have the time or capacity to sit in the board meeting no and deal with the c..."
The Joys of Being a VC
In this concluding segment, Mark Suster reflects on the joys and challenges of being a venture capitalist. He compares the thrill of being on the court as an entrepreneur to the strategic role of a VC. Suster shares his passion for mentoring startups and the fulfilling nature of his work, emphasizing the unique position VCs hold in shaping the future of innovative companies.
"here's how I talk about it all the time this is absolute truth Chason is if you can be on the court you want to be on the court if there's 12 seconds lame left in the game give me the ball I want to t..."
The VC Compensation Landscape
Mark Suster provides an overview of venture capital compensation structures, detailing the earnings of VCs at various levels. He discusses the wide range of salaries based on fund size and experience, offering insights into what junior partners and senior partners can expect to earn in the industry.
"Uber's growth from the from another LP barue sauce right so it's you really don't want to do that if you don't have to do that um so that's I think what people talk about when they talk about crossove..."
The Joys of Being a VC
Mark Suster reflects on the advantages of being a venture capitalist compared to being an entrepreneur. He shares his passion for the role, emphasizing the enjoyment of working with innovative founders and the thrill of being involved in transformative projects. Suster discusses the balance between the demands of family life and the rewarding nature of venture capital.
"around for 40 years and has a billion dollars per fund you might be paying yourself two or three million wow yep is it the greatest gig ever is it the greatest gig ever I mean you were an entrepreneur..."