Dave McClure

Founder, 500 Startups

THIS CHAT HAPPENED ON May 23, 2017

Discussion

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? Ok folks wow i tried my best to keep up with all the Q&A... ran over by 10m and still didn't get to all of them but i hope it was useful :) best of luck with all your startup efforts & hang in there! DMC
Sebastian Alvarez@sap323 · 99°
When do you know when it's time to close the door of a startup? We have revenue, but not exponencial for a while... It is worth it to keep trying or should we pivot?
Dave McClure@davemcclure · lost boy.
@sap323 that's always a tough Q. it's a very personal decision by the founders to figure out whether it makes sense to keep going or shut it down, but usually the best way to evaluate that decision is based on 1) are people using/buying your product? 2) are you and the team still passionate about what you are doing? if the answer to both of those is NO, then it might be time to call it a day. if the answer to both is YES, then you're probably doing something right. but most of the time, the answer is somewhere in between. good luck & keep fucking at it.
Ben Tossell@bentossell · newCo
Do you think people get a false sense of achievement by just being part of an accelerator which may blind them from actually building something of value?
Dave McClure@davemcclure · lost boy.
@bentossell yeah that happens sometimes. altho usually if you aren't moving forward building / marketing / selling stuff, you will get pretty immediate feedback (at least from 500) that you should get your shit together and stop playing startup theater. most of our companies are very focused on getting new customers and raising a seed round of capital. unless they are already profitable, if they don't do those things they will probably run out of money and die within 3-6 months.
keyul@keyul · Maker of Quick Code & Bot Stash
What is the most common trait you have seen among all successful startups came through 500startups batch?
Dave McClure@davemcclure · lost boy.
@keyul focus on customers. iterate on product & marketing to make them happy / successful. don't fucking give up.
Niv Dror@nivo0o0 · VC at Shrug Capital
Hey Dave! Thanks for joining us :-) What impact do you think AngelList's syndicates and AngelFunds can have on seed/pre-seed investments in startups?
Dave McClure@davemcclure · lost boy.
@nivo0o0 we are big fans of @AngelList (full disclosure: we are investors in AL, and Naval has been a friend for over 10 years), and almost all of our companies have profiles on AL. in fact, i believe we were the first accelerator to launch our application process on AL about 4-5 years ago. hundreds of our startups have used AL to raise capital, and it's one of the most useful platforms around for startup founders. i'm optimistic that the new AL funds will also create a great opportunity for up & coming investors to get started -- wish that i had that option 10 years ago when i started trying to raise a fund! big props and respect to Naval, Nivi, and the entire AL team.
Ayrton De Craene@ayrton · Code @ Product Hunt
What's the best pitch you’ve ever heard? In general what pitch tips for founders can you share with us?
Dave McClure@davemcclure · lost boy.
@ayrton most successful pitches are pretty simple and straightforward, and focus on showing evidence that customers are using the product. while you can tell a beautiful story, in general most investors are very skeptical about pitches and we usually think you are either lying to us, full of shit and ignorant, or both. the way to COMBAT that default expectation is to show us why and how customers are using your product, how the business is growing, why you are different / better than alternatives, and then other stuff about your team / market / investors / etc. but MOST of the time what we want to see is NOT your vision for the future, but how your product is CURRENTLY solving problems for customers and already growing. in short: most pitches segment into 2 types -- those WITH TRACTION, and those WITHOUT TRACTION. you want to convince me quickly that you are in the former group, and show me the evidence & metrics for that traction. if you DON'T have traction, then you want to tell me stories about the problems customers have, and why you are the best team to solve those problems, and perhaps what experience / success you have had in the past that demonstrates why that is likely. again to summarize: if you have TRACTION, tell me / show me right away -- like in the first slide, first 30 seconds. if you DO NOT have traction, tell me a story about a customer problem and how you plan to solve that.
Ryan Hoover@rrhoover · Founder, Product Hunt
Hey, Dave! We've all experienced "butterfly effects", those trivial events that change the course of our life. What seemingly small decisions or encounters got you where you are today?
Dave McClure@davemcclure · lost boy.
@rrhoover meeting folks like Mitch Kapor, Brad Feld, Fred Wilson, Josh Kopelman, Marc Andreessen and others & having them write a small first check in our first fund was a big shot in the arm. getting to work at PayPal in the early years was pretty fucking lucky. working (& mostly failing) at my first startup for 3-5 years taught me a lot. having my mom as a positive entrepenreurial role model in my life likely made a big impact too. overall, probably just living and working in Silicon Valley for over 25 years and being around other amazing folks is the biggest "butterfly effect" that had a positive impact on me / on 500. sometimes just showing up and working your ass off for awhile puts you in front of enough potential "coincidences" that a few things fall into place. but i wouldn't say any single one event changed everything -- just a lot of work over a period of time, and a few lucky breaks that went my way. as usual: just keep trying and don't fucking give up too soon.
Garrison Snelling@dev_gar · Co-Founder, Opel Pay
Do you think Americans are productive as they should be? If we were more productive would a 4% GDP growth be attainable?
Muhammad Ahmer@ahmer092 · Founder & CEO - Grevily
Hello Dave! I am from Pakistan and I'm the Founder & CEO of a VR startup - Grevily. We have created a VR Treadmill that is better in functionality than our competitors. We are at prototype stage and don't have any customers yet. I'm planning to apply at 500 startups. Can you give me some suggestions for applying at 500 startups? Do you consider startups from Pakistan for investment? And what are the chances of us getting selected for 500 Startups?
Dave McClure@davemcclure · lost boy.
@ahmer092 we have done a few investments in Pakistani founders, and are investors in Markhor / HomeTown (Pakistani startup with team in US). we are very optimistic about the potential for startups / founders from Pakistan, and hope to do more in the future.,
Jerry@jerry_hsiang1
What do you think are the implications of blockchain technology on the logistics and freight industry?
Oguz Serdar@oguzserdar · co-founder of Limk
Do you agree that token sales (ICOs) make VCs obsolete? Do you think that the recent trend of developers raising money from public will cause VCs getting slowly disintermediated?
Dave McClure@davemcclure · lost boy.
@oguzserdar eventually yes... but i'm guessing (hoping?) that will probably take awhile. likely that crowdfunding solutions can be helpful with the first $100K-$1M, but probably unusual for most companies to raise much more than $250-500K unless they already have their shit together. in any case, we view that capital as very helpful and complementary, but not likely to disintermediate larger VC investors (>$1M) anytime soon. then again, we might be wrong ;)
Oguz Serdar@oguzserdar · co-founder of Limk
@davemcclure Good ones already have been raising $10M-$30M from public in form of other tokens (usually Ethereum and Bitcoin) and they end up having literally infinite runway as the total market cap of cryptocurrencies keeps increasing. Just an example: Golem closed their token sale ($8.6M) back in late 2016, and their funds are already worth over $68M as I'm writing this. When 1 ETH will hit $500 (which is likely for later this year) their funds will be over +$200M. https://etherscan.io/address/0x7...
Niv Dror@nivo0o0 · VC at Shrug Capital
Have you ever invested in a pre-launch social app before a beta was even out? If, there was enough signal from other investors committed in the round? 🤔
Dave McClure@davemcclure · lost boy.
@nivo0o0 we have done pre-launch a few times, altho that was more common when we were first getting started and weren't as well-known... these days, we have a lot of dealflow to choose from that already is in the market (or at least functional beta) that has users/customers/revenue. we may still take a few early bets if we know the founders and they have previous startup experience. we may also take a few early pre-launch bets on products in fintech or other areas with security / regulatory rqmts that may have a longer pre-launch period. it would prob be tough for us to do a pre-launch bet on a social app, just because risk is so high... but maybe if we're in a good mood ;)
Emily Hodgins@ems_hodge · Operations @ Product Hunt
Hi Dave thanks for joining us today! What is the best piece of advice you ever received? How did this impact you?
Ben Tossell@bentossell · newCo
How many of the companies that go through a typical batch tend to be the ones worth investing in? If you had to use your personal money.
Dave McClure@davemcclure · lost boy.
@bentossell we usually invest in ~35-45 companies per batch. it's not always obvious which ones are going to work, and sometimes even 2-3 years later we find out we were wrong about which companies are really working / turn out to be the big wins. so far, after 4-5 years, it looks like we get big wins (10-20X or better) about 5-10% of the time, and smaller wins (2-5X) another 10-20% of the time. so in a typical batch, that usually means 1-3 big wins, and 3-7 smaller wins. we typically do follow-on investments about 10-20% of the time (altho we don't always pick the right ones either ;)
Jake Crump@jakecrump · Community Team with Product Hunt
What is your morning routine?
Dave McClure@davemcclure · lost boy.
@jakecrump usually i wake up and spend 20-30m scanning TechMeme and Nuzzel for relevant tech & startup news content, also twitter / facebook, tweet/share out some of that stuff, or share it on slack with our team internally. then i check email and slack for any critical items, take a look at projects & todo's and other items to get started. sometimes i get a little too distracted with news & social media, but at the same time it helps keep me up to speed on what's going on.
Chad Whitaker@chadwhitaker · Product Designer at Product Hunt 👋
What’s the future look like for 500 Startups?
Dave McClure@davemcclure · lost boy.
@chadwhitaker for the future of 500 Startups, we plan to continue scaling our investment programs and teams, more regional and vertical micro-funds, more content and education and events for our community. we are now over 150 people, across 20-25 countries, doing 400-500 investments per year. we aim to double that in the next few years. one other new area we are doing more now is working with governments and corporate entities to help them develop startup ecosystems, do investor education (like our "VC Unlocked" programs with Stanford and Berkeley, see http://500.vc), and help them figure out how to work better with startups and founders in Silicon Valley and around the world.
Wasim Ullah@deleted-174482 · Hustler.
What were some failures you have seen along while developing 500 Startups, what was the most difficult one and how did you counter the force?
Dave McClure@davemcclure · lost boy.
@mrwullah we have tried a lot of stuff, and typically most of it doesn't work... but that's par for the course with any startup (even though we are an investment firm, we are also a startup too!). we have had lots of challenges failures -- figuring out our products & services, raising capital, growing the team / making hires, competing with other programs like YC and TechStars (altho we also invest in their companies too), etc. etc. probably one of the biggest challenges we have had is expanding our investment globally and finding the right folks to join our team. we have launched >10 regional funds and have over 50 people on the team spread across 20 countries, however we haven't always made the right decisions. getting used to failures (without letting them kill you) as you iterate and adjust product & marketing strategy is pretty important. in at least 4-5 diff geographies, we didn't have the right strategy, and had to pull back / change our approach. that said, if we weren't ok with falling on our face a few times, we probably never would have gotten to where we are now. getting comfortable with fucking up in public and still forging ahead is a key 500 strength.
Wasim Ullah@deleted-174482 · Hustler.
@davemcclure Incredible.
Jacqueline von Tesmar@jacqvon · Community at Product Hunt ⚡️
What growth tips can you share with the Product Hunt community?
Dave McClure@davemcclure · lost boy.
.@jacqvon we have a ton of content available from the past several years of our quarterly Marketing Hell Week events and our annual Weapons of Mass Distribution conferences -- you can find more presentations, talks, slides and other info at http://growth.500.co + http://wmd.co
Elijah Elkins@elijahelkins · Talent Acquisition @ CloudFactory
What are the top 3-5 things a startup needs to have done or accomplished to get into a top accelerator? We will likely be applying for Avoda.io to Praxis soon and this would really help me prepare. Thanks! :)
Dave McClure@davemcclure · lost boy.
@elijahelkins see above, but in general 1) build a product, 2) get some users/customers, 3) figure out unit economics / how to make money, 4) work on retention & growth (usually make customers happy / productive, but also based on user experience and good, targeted marketing, 5) keep your team happy & productive, 6) make money / raise capital, don't run out, 7) don't fucking give up too soon.
Elijah Elkins@elijahelkins · Talent Acquisition @ CloudFactory
@davemcclure Awesome! Thanks Dave!
Adam Gering@adamgering · Founder of Uncommon Social
What emotions do the implications of Artificial Intelligence give you?