Dave McClure

Dave McClure

Founder & troublemaker at 500 Startups

THIS CHAT HAPPENED ON September 24, 2015

Discussion

Dave McClure
Dave McClure@davemcclure · lost boy.
The king of curse, the dark lord of disruption, the baron of bull shit... I am ready for you to ask me anything; are you ready for the answers?
Adam Marx
Adam Marx@adammarx13 · Freelance writer/editor and music addict
@davemcclure Hey Dave, It's a widely repeated statement among VC's and accelerators that (for many of them) the most important thing is the team, the people in which they invest. Given a product/service that has some potential, what sorts of qualities speak to you most in a person or team? To you, what makes someone magnetic?
Dave McClure
Dave McClure@davemcclure · lost boy.
@adammarx13 actually we think team is important, but it's hard to tell what people are really like until you get to know them well / work with them a lot... so we tend to look at the product, the customers, and the business as the work product that the team produces. hopefully this avoids bias in looking at people and judging based on what we *THINK* they can do...
Ali Halabi
Ali Halabi@xalihalabi · Founder & CEO at Volt
@davemcclure @adammarx13 How do you look at solo / non-technical founders?
Adam Marx
Adam Marx@adammarx13 · Freelance writer/editor and music addict
@davemcclure @adammarx13 That's a good point; one can't know how people really are (especially under pressure) after 1 or 2 simple meetings. Certainly the team needs to be a factor that buttresses an already promising product/service, not something that acts in place of one. Thanks!!
Dave McClure
Dave McClure@davemcclure · lost boy.
@xalihalabi @adammarx13 well, if you're solo you better be DAMN GOOD. and we don't just look for "technical" founders, we look for folks who can: 1) build product (code or visual design) 2) market & sell the product 3) manage & grow the team mostly we look for founders who fit 1 or more of the above categories, and what is there vs. missing when startups ask us to invest. we also look a LOT at the potential for growth, and strategies for customer acquisition.
Ryan Hoover
Ryan Hoover@rrhoover · Founder, Product Hunt
Dave! Welcome (this is going to be fun). I'll kick it off with two easy questions: 1) What's on your homescreen? 2) What app or product are you most embarrassed to admit you use?
Matt Silverman
Matt Silverman@mattjsilverman · Product Designer
@rrhoover "whats on your homescreen?" -- such a good question!
Dave McClure
Dave McClure@davemcclure · lost boy.
@rrhoover morning Ryan :) my homescreen is full of a bunch of saved links to files... it's kinda messy. but my browser is pretty much constantly open to facebook, twitter, and email... which makes me terribly unproductive ;) app or product i'm most embarrassed to use? hmm... well i'm a social media douchebag so it's almost everything. but i'm not embarrassed!
Adam Marx
Adam Marx@adammarx13 · Freelance writer/editor and music addict
@davemcclure @rrhoover "Social Media Douchebag" is going to be the name of my next ska-punk album I think ;)
Natalya Matyushenko
Natalya Matyushenko@ambercamel · Co-founder/COO at Spycob
Hello Dave, How critical it is whether or not a startup generates revenue for its application to accelerator to be successful? We have multiple avenues for collecting payments from customers, some of which we already tested. For example, "Buy for $1" feature that allows to search discounts over 75%. We grow on 5-7% per week and we don't want to sacrifice growth to short term earnings. Hence, we do not expect our revenue growth to be anywhere close to subscription growth in the near term. Could the Pinterest type of model where the key driver of value is subscription base rather than actual cash flow be something of interest to the accelerator?
Dave McClure
Dave McClure@davemcclure · lost boy.
@ambercamel for 500 startups, we like to focus on companies that 1) already have a shipping product, and 2) have some amount of usage and or revenue. the primary reason is it's easier for us to be helpful to companies when they already have users or customers, and we can focus on how to grow the business, improve the UX, and/or increase revenue or profits. these are much harder to work on if companies haven't shipped yet, or don't have much user / revenue traction.
Erik Torenberg
Erik Torenberg@eriktorenberg · Former Product Hunt
@davemcclure You have SO much to be proud of. What's something you're _not_ proud of?
Dave McClure
Dave McClure@davemcclure · lost boy.
@eriktorenberg oh gosh... i'm such a huge fuckup in so many areas. - i wish i was a better manager, and gave my team more props & respect when they do great shit - i wish i were a better parent, and had more time to spend with my kids - i wish it didn't take me so goddamn long to figure out startups & VCs & the valley (i'm still working on it at age 49) - i wish i weren't such an argumentative douchebag and was a little bit slower to anger / insanity - i wish i were taller, less bald, less fat, more sexy, and a lot smarter but then again, all in all i have a pretty fortunate life, and so i don't worry about all that shit and usually i'm just happy & grateful to be here... and hopefully i can be helpful to other folks. that makes me feel good :)
Andrew Ettinger
Andrew Ettinger@ettinger · 👟 @wearAtoms // ex @Twitter @ProductHunt
Hey @davemcclure, which lesser-known startup/product to have gone through 500 do you wish everyone knew about?
Dave McClure
Dave McClure@davemcclure · lost boy.
@andrewmettinger there's a bunch, but at the moment some of our best accelerator companies are: - TalkDesk - Intercom - Tout - Mayvenn - Conta Azul (brazil) - Realty Shares - Love With Food - PicCollage - there are many many others... apologies i just picked a few favorites :)
Hey @davemcclure what are your favorite books? and what are you reading now?
Dave McClure
Dave McClure@davemcclure · lost boy.
@alfink92 some of my favorite books: - Guns Germs & Steel - Don't Make Me Think - Godel, Escher, Bach: An Eternal Golden Braid - The Mystery of Capital - Spent: Sex, Evolution & Consumer Behavior - Flatland - Ender's Game - Snowcrash
Adam Marx
Adam Marx@adammarx13 · Freelance writer/editor and music addict
@davemcclure @alfink92 "Guns, Germs & Steel" is amazing. also heard his book "Collapse" is equally hard-hitting.
Ben Tossell
Ben Tossell@bentossell · Makerpad.co
@davemcclure Hey Dave - what is the craziest thing you've seen in a pitch that you can tell us about?
Dave McClure
Dave McClure@davemcclure · lost boy.
@bentossell umm... someone tried to pass themselves off as a massage therapist / gift from one of our partners, and then tried to pitch their startup while i was getting a massage. pretty uncomfortable / weird / sketchy experience. and i wouldn't talk to that entrepreneur ever again... so PLEASE DON'T FUCKING TRY THIS PEOPLE. #ahem
Ed Choudhry
Ed Choudhry@edch2020 · Founder and CEO of Sample Labs
@davemcclure @bentossell I thought ours was up there by putting red bull coolers in both offices for a couple weeks with our ipad app but dave was out the country that whole time.. :(
Ed Choudhry
Ed Choudhry@edch2020 · Founder and CEO of Sample Labs
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Alex Cook
Alex Cook@aacook · Founder of NanaGram
Hey Dave, thanks so much for doing this AMA. A couple weeks ago Sam Altman released a post about the "Post YC Slump" (http://blog.samaltman.com/the-po...). He talked about how some YC startups grow quickly and then flatline after YC ends. Sam also gave some great advice on reporting on growth to investors and friends. Curious if you see a similar pattern at 500? Do your teams continue to update 500 on their progress after the accelerator is over?
Dave McClure
Dave McClure@davemcclure · lost boy.
@aacook i think the experience is perhaps similar... lots of folks come out of 500 on a "high" and feeling like it was a great experience, but honestly the hard work of building a company is just beginning. that's not really a bad thing -- eventually, summer camp or college come to an end, and you have to get down to business and figure out what you want to do with your life, your startup, your product, and you need to build a sustainable business that produces products / services your users & customers care about... that's not easy, and even harder getting that to scale big. there are lots of moments of self-doubt, stalling out on product or customers, ups & downs, etc etc you have to motivate yourself and others every day to keep working hard, even if you don't always feel like it (or sometimes when you feel like shit). i don't have all the answers, but i know many folks get tired / fall by the wayside... it's not easy being an entrepreneur and getting a startup off the ground.
Dave McClure
Dave McClure@davemcclure · lost boy.
ok folks, my apologies tried to keep up with all the Qs! it's about 20m over the time period for the AMA, and i gotta get back to some other work now... hope i got to most of your burning questions :) thanks & see you in the salt mines!
V.S.VIVEK
V.S.VIVEK@vsvivek93 · Unoccupied
@davemcclure Hey Dave, Thank you for doing the AMA. I have two questions regarding the Indian ecosystems. What are your thoughts about the Indian ecosystem? And how far is it from reaching the maturity of the valley? In the valley there is a lot of activity and knowledge sharing surrounding the startups like (designers , product , marketers and many other similar groups) but this is not the case in india, Would 500 startups be interested to look into startups which want to change that for india in specific?
Ameya Sahasrabudhe
Ameya Sahasrabudhe@astronautameya · CEO, Ithaka
@vsvivek93 They recently opened up in South East Asia and accept indian startups regularly, I'd say pretty soon.
Dave McClure
Dave McClure@davemcclure · lost boy.
@vsvivek93 i think there is huge potential in the Indian startup ecosystem -- we've done ~50 investments in India over the past 3-4 years, and we expect that to continue and/or grow to 20+ investments per year in future (maybe more). we've always been bullish on India startups, however after the Modi government came to power it seems like there's a lot more business optimism in the country, particularly among local VC community. also Softbank putting $1B into SnapDeal, FlipKart raising big money, and other Japanese / Chinese / other investors coming into to the market has made people a lot more positive about the future. we think valuations/prices may be getting a bit ahead of themselves lately, but we are still very bullish on the long-term prospects for startups in India. talk to Pankaj Jain (@pjain) on our team for more details about our India strategy & plans, and also to Shalini Prakash (@shalini_prakash) in Bangalore :)
V.S.VIVEK
V.S.VIVEK@vsvivek93 · Unoccupied
@davemcclure @vsvivek93 Thanks Dave ! Will certainly do that
Erik Torenberg
Erik Torenberg@eriktorenberg · Former Product Hunt
Some people have critiqued your approach as "Spray & Pray" -- what are the biggest misconceptions they have about your investing thesis & approach?
Dave McClure
Dave McClure@davemcclure · lost boy.
@eriktorenberg they tend to think we don't have a process or methodology, or that it's like "gambling", or that we are drunk or high or crazy as we are doing it. it's a bit frustrating, but we try to ignore the haters and just focus on what we know works best for us. i've written more about our philosophy in this blog post: 99 VC Problems But a Batch Ain't One https://500hats.com/99-vc-proble... to be clear: investing in lots of companies IS NOT GAMBLING. in fact, it's quite the opposite... we are applying a very straightforward and mathematical approach to investing based on data and results. most VCs don't agree, but then again most VCs also don't find unicorns or even return capital to their investors. our methods work, and we have already found/invested in 3 unicorns (Twilio, Credit Karma, GrabTaxi) with another 30 companies that are valued at >$100M and growing. and we have many more on the way. it may only be the case that we are "right" in a big way 1-5% of the time, but if you don't invest in at least 100s of companies, your chance of finding unicorns or big outcomes are close to zero.
Augustus D'Souza
Augustus D'Souza@augiwan · CEO, Rockode Inc
@davemcclure Hey Dave! I have a question regarding international applications to 500 (Montain View/SF) : Internally, is there a grading system where your team allocates certain "points" to startups based on how "favourable" their location is (for founders/team to be part of the program in the US) ; does being in another country affect the application in any way?
Matt Silverman
Matt Silverman@mattjsilverman · Product Designer
@davemcclure Hey Dave - AARRR!!!!! I have admired you for quite some time now and constantly find myself referring to your, "startup metrics for pirates" slide decks, as well as the many other published sources of yours. So thank you for helping inspire my career. #500strong My question is, when YOU invest in a seed round - what are the most important metrics you look for in a consumer software startup?
Dave McClure
Dave McClure@davemcclure · lost boy.
@mattjsilverman generally it follows a lot of the same concepts applied in reverse: - is there a shipping product? - are there users or customers? - what's their experience like? is it easy to "activate" or engage with the product or service or app? - how many users or customers are "active" and keep coming back / what does retention look like? - are the unit economics cashflow positive, or can they be in the near future? - HOW DO WE GROW THE BUSINESS? what channels are currently working & scalable & profitable? - how do we get to sustainable / scalable growth, or sustainable / scalable revenue? - or are we sure the business will have downstream investors / acquirers? also: - what color is the sky, and how do i feel about having lunch with this founder several times a year for the next 5 years? ;) (some things aren't always analytical, and life is too short to work with assholes -- except me, of course ;)
Ameya Sahasrabudhe
Ameya Sahasrabudhe@astronautameya · CEO, Ithaka
Hey @davemcclure I just tweeted you to remind you about this AMA! Facebook became a social giant. Google became a search giant, Apple became a gadget giant and Uber seems to be on its way in Logistics. Where do you think the next giant will come from, which sector/field in particular.
Dave McClure
Dave McClure@davemcclure · lost boy.
@astronautameya certainly we are waiting the emergence of a giant in VR/AR, and also in drones / delivery. i'm not the world's best maker of predictions, so i won't try and guess what's happening next... we just like to invest in smart people who have potential, and we make a LOT of those bets :)
Ameya Sahasrabudhe
Ameya Sahasrabudhe@astronautameya · CEO, Ithaka
@davemcclure @astronautameya How about travel? AirBnB has captured our imagination with their unadulterated hustle, but nobody has really dominated world travel with a GOOD PRODUCT yet. the Priceline and Expedia mafia is just plain crap :/ DISCLAIMER: I am biased, we are building a travel startup :D
Raisa
Raisa@raisarahm · Co-founder, Airposted
@astronautameya @davemcclure I just started a peer to peer international shipping company.. Huge focus on travel and delivery :) https://airposted.com
Pritish Sanyal
Pritish Sanyal@sanyalpritish · Director Business Development
@astronautameya @davemcclure I don't agree with your UBER hypothesis, it will have a similar outcome as Walmart.. Massive US success & failure in every other major market... the only way this will be true is if UBER wins against OLA
Olly Whittle
Olly Whittle@owhittle · founder, BudiPay, BeBirbal and SWARM
@davemcclure what is one thing you tell every startup no matter what the product or industry?
Dave McClure
Dave McClure@davemcclure · lost boy.
@owhittle 1) watch what customers do, not what they say. 2) work on marketing as much as product. 3) don't give up. get back to fucking work.
Matthew Berman
Matthew Berman@matthewberman · CEO, Sonar (sendsonar.com)
Hey Dave - Three questions: 1) As a major world traveler, what's your current favorite country to visit? 2) What are the qualities you look for from a potential venture partner @ 500 Startups? 3) Who is your favorite former 500 Startups employee and if it's not me, why not?
Dave McClure
Dave McClure@davemcclure · lost boy.
@matthewberman HAHAHA awesome questions. 1) toss-up, but right now Thailand, Japan, Singapore, Dubai/UAE are favorites... but so many :) 2) people who know their shit, are passionate, and not afraid to voice their opinions... also domain expertise in some area of engineering, product, marketing, or design 3) of COURSE IT'S YOU MOTHA FUCKER!
John Freddy Vega
John Freddy Vega@freddier · CEO, Platzi.com
Hey @davemcclure, do you see a shift in "unicorns" being born outside of Silicon Valley? Where? Or is Silicon Valley still the best place on Earth to create a world-changing company, even if you're a foreigner?
Dave McClure
Dave McClure@davemcclure · lost boy.
@freddier we don't worry about whether they're going to be unicorns when we invest -- we just want to see smart founders with useful products and growing customer base. that can be done in MANY places around the world that aren't Silicon Valley. and we expect PLATZI to be one of those!
Erik Torenberg
Erik Torenberg@eriktorenberg · Former Product Hunt
Huge Thanks to @davemcclure for taking the time to drop knowledge bombs on us today.
Dave McClure
Dave McClure@davemcclure · lost boy.
@eriktorenberg thanks for the opportunity Erik! :)
Rainer Dechet
Rainer Dechet@rainerdechet · Founder: Adatch, Tinder for ad campaigns
Where's your mustache and why didn't you invest in Uber, at that time?
Dave McClure
Dave McClure@davemcclure · lost boy.
@rainerdechet i usually have a scruffy goatee and a 5-day mustache... after that it gets itchy and i shave 1x or 2x week. re: uber -- it was a giant fuckup on my part, and i think about it almost every goddamn day... le sigh.
Rainer Dechet
Rainer Dechet@rainerdechet · Founder: Adatch, Tinder for ad campaigns
@davemcclure Cheer up! The next unicorn is sure to come...
Marwann
Marwann@marwannas · Founder @ Les Voyages d'Emma
@davemcclure Hi Dave, Wondering what you think about "invisible apps", ie. apps with no interface taking advantage of messaging platforms. (see @rrhoover's collection for examples: www.producthunt.com/@rrhoover/co...) Thanks in advance for your answer!
Dave McClure
Dave McClure@davemcclure · lost boy.
@marwannas well, i kind of think there's still some kind of interface there, even if it's just SMS or the messaging platform... but i do like the idea of letting users jump right in and use your service without any learning barriers or hassle in figuring out what's going on. but still, "invisible apps" probably also have some tips/tricks on how to use, so i think the emphasis is really on just making the UX simple and easy for new users. in that sense, i like them :)
Quang HOANG
Quang HOANG@qhoang09 · CEO @ PlatoHQ
@davemcclure Hi Dave, You invested in Growbot on your last batch of 500 startups. What is your vision about Slack bots? Can they become the futur of SaaS for BtoB ? Thanks !
Dave McClure
Dave McClure@davemcclure · lost boy.
@qhoang09 well, the interface is still a bit rough on slack bots... we are playing around with a few concepts internally (mostly for just having our 500 slackbot heckle us when we use certain words or phrases ;) it seems like it has promise, but might want to see what Slack HQ is cooking up as a platform. i'm optimistic it could turn into a big platform for 3rd-party apps & services.
Emily Snowdon (née Hodgins)
Emily Snowdon (née Hodgins)@emilyjsnowdon · Operations @ Product Hunt
Dave hi! Thanks for joining us today. 🙌 What has been your most memorable moment of your career to date? Thanks!
Dave McClure
Dave McClure@davemcclure · lost boy.
@ems_hodge wow that's kind of a big question... perhaps getting the first closing of 500 Startups first fund together back in July 2010... that was a big day. making our first investments out of the fund was pretty proud moment. but there are many awesome moments -- our first demo day (and really EVERY demo day we are proud parents), our first big exit, hiring our first employees abroad, talking to amazing entrepreneurs in other countries...etc. anyway, i have a pretty awesome job & i feel very lucky :)
SyntacticSugarDaddy
SyntacticSugarDaddy@mitchwongho · Android Engineer
Hi @davemcclure. What is your outlook for sub-saharan Africa? Where do you see opportunity?
Dave McClure
Dave McClure@davemcclure · lost boy.
@mitchwongho we have a small investment in Savannah Fund out of Nairobi, Kenya, and we have made a few investments in companies from South Africa, Ghana, and Kenya. i'm not the expert on the sub-saharan African market, but seems like there are 3 areas of major activity in East Africa (Kenya + surrounding countries), South Africa, and West Africa (Ghana & Nigeria). likely we will increase our investment activity on the continent a lot more in 2016-17, and we are already fairly active in North Africa (mostly in Egypt) and MENA region, with about 30 investments in startups working in the Arabic-speaking market.
Rajesh Agarwal
Rajesh Agarwal@agarwalrajesh
Hello @davemcclure - Good Morning! We are first time entrepreneurs! What is your take on using offline marketing (flyers, talks, booths) to promote a hyperlocal mobile app? Could you suggest some ways to make it effective?
Dave McClure
Dave McClure@davemcclure · lost boy.
@agarwalrajesh hmm... in general, i'm skeptical of most offline marketing methods, except where the customer or transaction is VERY valuable and you can afford the spend. certainly broadcast mediums like television, radio & print still work, but they are usually pretty expensive and not very targeted (altho some tv & cable certainly can be). but in general offline methods don't scale well, unless you have a very good plan for how to get the word out cheaply, or you can depend on very active word-of-mouth (aka "viral") marketing that is based on a frequent use audience and/or amazing product.
Smaran
Smaran@smaransmarty · Founder, RedSafeBox
@davemcclure What has been your biggest lesson learnt? Or what do you think you would have done better?
Patrick
Patrick@fransmcfarlane · Student
If you could meet one historical figure who would it be ?
Dave McClure
Dave McClure@davemcclure · lost boy.
@fransmcfarlane i'd like to meet Bob Noyce, one of the original Traitorous Eight who walked out of Shockley Semiconductor and started Fairchild and then later Intel... seems like he would have been an awesome guy to have a beer with: https://en.wikipedia.org/wiki/Ro...
Patrick
Patrick@fransmcfarlane · Student
What is the single greatest lesson you learned in your life ?
Dave McClure
Dave McClure@davemcclure · lost boy.
@fransmcfarlane that when i open my big fat mouth, something usually happens.... could be good, could be bad. whether or not to keep my mouth shut is still a lesson i'm learning, but usually i can't fucking control myself and i just say what i think. c'est la vie.
Ben Tossell
Ben Tossell@bentossell · Makerpad.co
@davemcclure Hey - What are some startups that you missed the boat on and wish you'd gotten involved with?
Dave McClure
Dave McClure@davemcclure · lost boy.
@bentossell oh man, so many. Uber is probably the biggest, but also Transferwise, Pinterest, many others. but we can't dwell on the past... there will always be great NEW companies to take a look at... and we will probably miss a bunch of those as well. just keep working your ass off, and hopefully we find a few of them :)
Say-REM
Say-REM@sairamr · Product Manager
@davemcclure What's you advice to someone who has a fulltime job, and is working on an App or a product on the side. What are the signs she/he should look for from the new venture to know if they are ready to take the plunge.
Dave McClure
Dave McClure@davemcclure · lost boy.
@sairamr when customers ask you to build / deliver more shit, and they're paying for it, and you're passionate about what youre doing... then it's time :)
Melvin Chee
Melvin Chee@melvincheezzy · Growth Hacker & Entrepreneur
Hey Dave, 1) Do you have a list of books that you recommend to 500startups' founders? 2) What is the "one thing" that gives you an indication to whether invest or not invest in a startup? 3) Top 3 favourite startups in your portfolio?
Tefo
Tefo@tefomohapi · Nerd. Media Hacker. Founder @iAfrikan
@davemcclure For a tech startup less than a year old what should the focus be: Growth or Profit?
Dave McClure
Dave McClure@davemcclure · lost boy.
@tefomohapi well, first focus on USAGE / Activation. then consider focusing on growth, as long as you can satisfy the capital needs of the business... otherwise, you might have to focus on profit or revenue first before optimizing growth. each startup is prob a little different, altho growth is usually more important in the beginning.
cinegeek
cinegeek@jakubgorajek · CEO, Verly
what do you think about Vertical Video trend for mobile advertising?
Paul Robert Cary
Paul Robert Cary@prcary · CEO, Findie | www.findie.me
@jakubgorajek Nice question! We are developing our own vertical videos.
Verly
Verly@verly_market · Verly
@prcary @jakubgorajek cool maybe you want to list your footage on our Vertical Video Marketplace - www.verly.io ;) @davemcclure we would love to hear your feedback ;) kick our ass
Nick Karnik
Nick Karnik@nick_karnik
@davemcclure Does 500 startups invest in startups targeting South East Asia? Shall we get introduced to you for that?
Dave McClure
Dave McClure@davemcclure · lost boy.
@theoutlander yep, we've invested in over 50-60 companies in SE Asia. we have team in Singapore, Malaysia, Vietnam, and Thailand. also companies in Indonesia & Philippines.
Troy Shu
Troy Shu@troyshu
What is something you're interested in finding (types of investments and/or teams, knowledge on certain topics, anything), but haven't been able to?
Dave McClure
Dave McClure@davemcclure · lost boy.
@troyshu i'd love to talk to more startups applying gamification in the workplace, and/or people working on b2b apps and services that are using consumer marketing techniques or viral loops to increase user retention. in particular, i'd love to see people work on apps for the workplace that allow people to "bet" (real money or virtual) on whether people are likely to complete a project or task, and in what time period. basically, i want to see betting marketplaces for worker productivity. (sounds kind of evil i know, but it woule be awesome to use the crowd to figure out how to improve workplace productivity, and who is REALLY likely to get shit done... also would be great to bet against office politics, and bet on people who accomplish tasks)
Smaran
Smaran@smaransmarty · Founder, RedSafeBox
@davemcclure @troyshu Maybe Crowdfunding at the workplace to optimize Innovation Dollar spend
VillageLabNet
VillageLabNet@villagelabnet · Business ecosystems manager
@davemcclure @troyshu Interesting that most of what you mention is about currency design. Viewed from the #metacurrency principles of Current-sees, ways of enabling, measuring and making flows visible. Of course larger than tradeable currencies. Gamification can be the perfect application for currencies. For worker productivity I got reminded of the work of open value networks and value accounting that Sensorica, VillageLab and the Metacurrency project are doing.
Eli K.
Eli K.@eli_s_kami · AlibiChat.com
@davemcclure Glad we're on your radar. We're working on gamifying the messaging space & testing peoples limits (teens mainly). Maybe we'll show up on your queue soon. & yes Pirates are bitchtastic
Mohamed Said
Mohamed Said@themsaid · Web Developer at Laravel
@davemcclure what's the key feature that makes you decide that this startup has a future?
Ali Halabi
Ali Halabi@xalihalabi · Founder & CEO at Volt
@themsaid other than traction obviously :)
Dave McClure
Dave McClure@davemcclure · lost boy.
@themsaid usually when the business metrics are going sideways or down, or only increasing slowly, and when the company is running out of money. (or, if the founders are a pain in the butt to work with)
VillageLabNet
VillageLabNet@villagelabnet · Business ecosystems manager
if a startup has innovative ways of measuring wealth and not only money, is that interesting for an investor?
Dave McClure
Dave McClure@davemcclure · lost boy.
@davemcclure @themsaid oops sorry think i answered this in the opposite way i was supposed to... thought you said *doesn't* have a future. but really it's pretty simple -- we like when we see products that people use regularly & they're growing... kind of makes sense, doesn't it?
Mohamed Said
Mohamed Said@themsaid · Web Developer at Laravel
@davemcclure @themsaid don't worry i got it :)
Patrick
Patrick@fransmcfarlane · Student
@davemcclure If you were able to read ONLY one book on your death bed what would it be?
Dave McClure
Dave McClure@davemcclure · lost boy.
@fransmcfarlane hmm tough call. Guns Germs & Steel is still one of my favorite non-fiction books. Dune or Snowcrash or Ender's Game for fiction.
Raj Sheth
Raj Sheth@webmasterraj · CEO, Symni
@davemcclure Hey Dave. Wondering what the 500 Startups accelerator experience is like. How would you break down the time startups spend meeting with advisors / peers vs hacking away alone on the product? For example, YC takes a strong stance on limiting meetings and emphasizing working on the product instead. Do you agree?
Dave McClure
Dave McClure@davemcclure · lost boy.
@webmasterraj build something awesome that people love to fucking use and/or pay for ;) then GROW!
Win Raguini
Win Raguini@sfkaos · CTO, Vango
@webmasterraj just having finished B12 I can say that you can meet with advisors/peers as often as you need to get help putting your product in front of as many potential users as possible. But with this you definitely have to be proactive - weekly meetings with your mentors are the norm (above that is up to you).
Raj Sheth
Raj Sheth@webmasterraj · CEO, Symni
thanks @sfkaos. that's what i was hoping to hear :)
Julia Volyanska
Julia Volyanska@juljuly · Marketing at an investment fund
@davemcclure, thanks for joining us today! At 500Startups you guys are doing a lot of investing globally, so I was wondering which international startup hub do you think has the most potential to become the next Silicon Valley? And which one has the best environment for young professionals to build their expertise? Thanks so much! Julia
Dave McClure
Dave McClure@davemcclure · lost boy.
@juljuly we invest all over the world, and we have people on our team in 17-18 countries... so it's hard to pick just one place where things are happening. certainly Beijing / China is a huge startup hub that in many ways is even more active than the valley. that said, we are pretty optimistic about SE Asia in general, also the Spanish-speaking and Arabic-speaking markets in LatAm and MENA. India is a big opportunity, as well as other emerging markets like Brazil, Turkey, and many others. i don't know, it's hard to pick just one... and so we don't!
Hitster GTD
Hitster GTD@hitstergtd
@juljuly @davemcclure another similar question; what do you think the UK needs to do that it doesn't already do to catalyse more startup activity?
Julia Volyanska
Julia Volyanska@juljuly · Marketing at an investment fund
@davemcclure thanks Dave! I personally believe it would do UK good to give more thought and opportunities to remote workforce
Rajesh Agarwal
Rajesh Agarwal@agarwalrajesh
Hey Dave - When building something, how do we balance between what we feel strongly about and getting users to validate it? Users sometimes may not know they need it
Dave McClure
Dave McClure@davemcclure · lost boy.
@agarwalrajesh i have no fucking idea, but if you ignore users/customers and focus on your own gut instinct, you better goddam be right. most people are not Steve Jobs... and even Steve Jobs wasn't Steve Jobs all the time. watch customer behavior. test all the fucking time. keep iterating based on real-world data, not in your own fucking head. your intuition will be 1000x better if you test it against the real world and users/customers.
Hitster GTD
Hitster GTD@hitstergtd
@davemcclure; Hi Dave, first of, thank you very much for doing this session, appreciate you probably may not get around to this post. I was wondering if you have been looking in Africa (particularly East Africa) for startups? Some exciting stuff happening there. Also, I have always been told that a so-called fundamental tenet of entrepreneurs/start-up/upstart mavericks is to make oft-uncomfortable statements, so here it is... please follow me on Twitter @hitstergtd, because I am in midst of doing interesting things and of course, I am a big fan of yours. Thanks again for taking the time to read this! May the force, be with you. :-)
Dave McClure
Dave McClure@davemcclure · lost boy.
@hitstergtd not super experienced in africa just yet, but we've done ~10 investments so far. likely more in the future. see above comments on Africa market.
Hitster GTD
Hitster GTD@hitstergtd
@davemcclure @hitstergtd Thanks Dave, kudos for answering all these questions; and for the brilliant answer wrt. Africa.
Will Luke
Will Luke@mailliw
@davemcclure Hi Dave. How receptive, in your experience, are VCs and investors to first-time founders who have their own bills and families to support? We all have bills to pay, kids need their milk, the house, etc. Right from the off, some of us need to take a salary. Is that frowned upon?
Dave McClure
Dave McClure@davemcclure · lost boy.
@mailliw well, we all got issues to deal with. kids and family make it more challenging, but we are all human beings with stuff to handle. just gotta work harder ;)
Antonio
Antonio@ob5c3ne · Working on my own project
Hello Dave, I'm from Mexico and I know very few mexican startups have succeeded internationally, in your opinion what is needed in order to replicate the success of american startups or at least israel startups that reach millions/billions of people?
Earteza Auvee
Earteza Auvee@earteza · Team Member @Foundedx
@davemcclure Hello Dave This is Earteza from Bangladesh Founder of FoundedinBangladesh.com is there any plan for Bangladeshi Startups from 500 Startups ?
Divraj
Divraj@divraj · divraj.com
1) Is there going to be second season of BDC ? 2) Should startups be choosing ambitious idea's ?
Dave McClure
Dave McClure@davemcclure · lost boy.
@divraj 1) if we don't suck... i sure hope so. 2a) startup founders should choose ideas they are passionate about, and hopefully also 2b) that other people give a fuck about.
Gauthier Maire
Gauthier Maire@gauthiermaire
@davemcclure Hi Dave, questions concerning start-up valuation : 1) What is on your opinion, the best way to valuate a start-up making no revenue. 2) Other methods can be used ? Thank you for your time
Dave McClure
Dave McClure@davemcclure · lost boy.
@gauthiermaire it's really really fucking hard to assess valuation for early-stage startups, particularly those with limited usage and/or early or no revenue... i've been doing this for over ten years, and i still don't fucking know! we guess a lot :)
Dinesh Rao
Dinesh Rao@i_dino · Entrepreneur, co-founder: Ridengine Inc
@davemcclure Firstly, Hopkins and proud! With interest in startups booming, What advice would you give to budding investors?
Dave McClure
Dave McClure@davemcclure · lost boy.
@i_dino write lots of little checks, and don't concentrate portfolio unless you REALLY REALLY REALLY know what you're doing. for more info, see this post i wrote: https://500hats.com/99-vc-proble...
Mike Hince
Mike Hince@zer0mike · Freelance UI Designer Founder Howler.co
@davemcclure Hey! If investors say your startup is 'interesting' is this their polite way of letting you down. 😂 Or are investors much more upfront about this sort of stuff? Thanks! M
Dave McClure
Dave McClure@davemcclure · lost boy.
@zer0mike usually investors are polite but useless fucking liars... very few people will tell you straight to your face what they really think, and/or what they think is fucked up or not working. altho it's harsh, we try and give straight to the point, specific feedback, and let founders know what we are thinking (even if we are wrong or foolish, helps to let them know)
Mike Hince
Mike Hince@zer0mike · Freelance UI Designer Founder Howler.co
@davemcclure Interesting, so don't trust anyone but get you to look at it? 😜 Thanks for the reply. Appreciate your time.
D 0'clock
D 0'clock@d0clock · RedHare
@davemcclure @zer0mike and how about the other way round? How are frank but substantiated opinions / pushback from Founders received by investors?
Say-REM
Say-REM@sairamr · Product Manager
@davemcclure - A common question that is asked is for a new (tech?)product - 'How will this Scale?' . In the case of products targeted for a niche group - like Gluten Free, or Vegan, ColorBlind people , or any such sub-group that is small compared to the overall population, how does one achieve scale? and what in such a business will be interesting to prospective VCs.
Dave McClure
Dave McClure@davemcclure · lost boy.
@sairamr well, i think what we really are trying to figure out is whether the team can discover scalable methods of growth, and whether that growth eventually turns into users, revenue, or profit. guessing isn't really a good way to figure it out -- usually we want to see some behavior patterns or previous successes that lead us to believe more wins are coming in the future.
Ed Choudhry
Ed Choudhry@edch2020 · Founder and CEO of Sample Labs
Favorite hip-hop song to bust a move to right now?
Dave McClure
Dave McClure@davemcclure · lost boy.
@edch2020 Missy Elliott, pretty much anything, but particularly "Work It" also love the Neville Brothers "Use Me Up" (or maybe that was just Aaron, i can't remember)
Pranay Srinivasan
Pranay Srinivasan@utekkare · Onwards - Founder, *Coming Soon*
@davemcclure how does 500 Startups do with follow on financing post Series A with companies that are raising larger rounds? Are you guys able to maintain pro rata and what are the challenges / opposition you face around that?
Dave McClure
Dave McClure@davemcclure · lost boy.
@utekkare these days we prob follow-on in ~15-20% of our initial investments (altho it used to be higher, more like 30%)... we've gotten more selective over the years, and we've also realized in many cases even when we think the company is doing well / better than before, it's still an uphill battle to get a win / get an exit, and even harder to get a BIG win or exit. so in hindsight, we've realized we better be DAMN SURE things are working when we double-down, and also that we double-down big enough to make a meaningful bump in the incremental outcome (if it happens)... which is pretty hard to know / do. most times, we get the opportunity to follow-on, but in a small capacity relative to the new round (usually we aren't more than 5-20% of the round, and we are smaller investors in Series A/B rounds, perhaps only $200-500K out of $3-10M rounds). we are still learning / optimizing our methods, but in general we prefer to write lots of small checks early, and double-down / follow-on selectively (10-20% of time) in a minority capacity (we don't usually lead rounds).
irit israeli-kahana
irit israeli-kahana@iritisraeli · Managing partner at AfterDox investment
Hi @davemcclure, why going strongly east & south, what ur expectations from those new communities - to find startups which will immigrate to US/SV or grow in their own area
Adam Lee
Adam Lee@oilcanguitar · CEO, Bohemian Guitars
@davemcclure Dave what is your travel routine like // how do you stay so focused with all that traveling? I can barely do 1 quick 5 day China round trip without turning into a zombie...nothing a redbull espresso can't cure of course... #500bazilionstrong
Dave McClure
Dave McClure@davemcclure · lost boy.
@oilcanguitar i generally travel about 50% of the time, and i visit ~20 countries / ~50 cities per year. most of my travel is international, altho i try to make it to NYC and LA regularly in the US, and other cities as time permits.
Alexandra Titova
Alexandra Titova@alexia_int · Marketing Manager, Eastern Peak Software
@davemcclure Hey Dave, what do you think about outsourcing a full R&D of a startup abroad? What was your own experience with software development outsourcing? What are investors' concerns about it and how do you deal with that?
Dave McClure
Dave McClure@davemcclure · lost boy.
@alexia_int it's possible, but tough to get investors comfortable with that strategy unless you've done it before, and unless you have someone on your team who is technical / knowledgeable enough to take over if the outsourcing fails or blows up. it can work, but usually most investors don't like it.
Gabriel Schiavinato
Gabriel Schiavinato@sch1av1nato · Cofundadores.com.br
I´m from Brazil and I see great applications and business solutions being made abroad which in my opinion would greatly work overseas. Shouldnt small tech companies lunch earlier overseas, maybe get traction in places they didnt expect?
Dave McClure
Dave McClure@davemcclure · lost boy.
@sch1av1nato i think it's better for founders to start in markets they know, then go/grow to other markets after they have some initial traction. particularly if your market is 50-100M+ people, it's not a bad idea to get product/market fit in your home market first, then after validating try to open up new markets.
Vick
Vick@blangkonds · Observer
@davemcclure How do you solve Southeast Asia's (Indonesia) lack of M&A or Later Stage funding(Exits) ? Also, Do you think regulators should be more involved in startups ecosystem (red tapes, quality accelerators, second cities)? you always talked about Infrastructure, Logistics and Payment themes. Thanks, Keep kickin ass Dave, Im a big fan.
Dave McClure
Dave McClure@davemcclure · lost boy.
@blangkonds i think SE Asia market is doing fine, and the exits will happen over time. we've already had one big exit in Viki (Singapore, sold to Rakuten). there are also plenty examples of big exits in Malaysia & SG, and plenty of acquirers from Japan / China / Korea that are likely buyers of SE Asian startups. not really that big a problem. in other markets this might be more of an issue, but SE Asia startup ecosystem is coming along quite nicely.
D 0'clock
D 0'clock@d0clock · RedHare
@davemcclure @blangkonds Korean buyers - really? That is a market that seems only keen to build and not buy - plus buyers there seem much more focused on increasing domestic market share / growth instead of overseas buys (stark contrast to the Japanese, IMHO)
Vick
Vick@blangkonds · Observer
@davemcclure @blangkonds Thanks, I was commenting from your talk at Stanford about your thesis in SE Asia. What about missing unicorns (Uber)? I think companies like Go-Jek is going to blow up big time, any insights about how to measure potential scalability of a company?
Ameya Sahasrabudhe
Ameya Sahasrabudhe@astronautameya · CEO, Ithaka
@davemcclure would you invest in a kickass team that doesn't have its tech sorted yet (no tech cofounder), but managed to release products and gain decent traction?
Dave McClure
Dave McClure@davemcclure · lost boy.
@astronautameya prob want to take a closer look if you don't have tech founder / resources. but good products / user traction might offset. still, need to know who's going to be building shit in the future.
Will Luke
Will Luke@mailliw
One more if that's ok. Which city in Europe would you rate as the buzziest for start-ups? London, Berlin, Lisbon or where?
Dave McClure
Dave McClure@davemcclure · lost boy.
@mailliw London and Berlin seem to be where most EU startups are happening at the moment.
D 0'clock
D 0'clock@d0clock · RedHare
Hi Dave, outside of the tech / VCs / Startup world, what companies or CEO's do you respect the most and why?
Eli K.
Eli K.@eli_s_kami · AlibiChat.com
@davemcclure you mentioned your addiction to social, so how do you determine value when most nubees in the space are far from monitization. When being pitched by social startups what metrics help you determine whether or not their product is crap?
Thomas Griffin
Thomas Griffin@thomasle0n · CEO, ArtSquare
@davemcclure, Do you guys double down in large fragmented markets? I saw the Bazillion Dollar club feature on Vango and was curious if the fund makes complimentary investments in the same vertical.
Thomas Griffin
Thomas Griffin@thomasle0n · CEO, ArtSquare
and any examples of this?
Hernan Puente
Hernan Puente@isopo · Co-Founder @ Indicius
Hi Dave. What about Latin America and, specifically, Argentina? Any experience so far? If so, any comment or pattern to highlight from previous experiences in this context? Also, do you have a jobi?
D 0'clock
D 0'clock@d0clock · RedHare
Diversity and gender equality - how important is this to 500 Startups? With regard to (i) the 500 Startups team itself, and (ii) the companies you back?
Vitaliy Rizhkov
Vitaliy Rizhkov@startuplabsblog · CEO of PICR Inc.
@davemcclure Dave, should I seek for investors if I have enough money to skip seed and A round?
Rahul
Rahul@rahulmfg · Full Stack Dev @Product Hunt 😺✌️
@davemcclure hey Dave, what do you think about India in terms of startup and any fav startup founder from India ?
Ekaterina Klink
Ekaterina Klink@ekaterinaklink · Growth & International Bizdev
Hey @davemcclure ! You currently expanded to Russian market. What are your expectations from there?
Alex Vinogradov
Alex Vinogradov@alexvinogradov4 · http://www.cfc.io http://heartin.net CEO
@davemcclure hi Dave. For my http://heartin.net i'm looking a help to grow distribution channels worldwide. Is it possible to cooperate with you for that way, not for acceleration? I was very success on TC Disrupt yesterday, on hardware alley. Alex