Roy Bahat

Roy Bahat

Head of Bloomberg Beta & lecturer at UC Berkeley

THIS CHAT HAPPENED ON October 16, 2015

Discussion

Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
Hi I’m Roy Bahat... I invest in companies that make work better, and think and write about the future of work. The fund I started, Bloomberg Beta, open sourced our whole operating manual, so I already said most of the things. Before becoming a VC, I tried to make my own work better, mostly while I ran the videogames media company IGN. I hired engineers without looking at their resumes. I also co-founded the Kickstarter-backed game console, OUYA. In my next life, I play Werewolf every day.
Anil Dash
Anil Dash@anildash · CEO, Glitch
What was the business case behind you choosing to be so transparent about how Beta works?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@anildash As a founder, I wanted investors to be less secretive. I'd wait a week to get a meeting with someone just to feel dumb that I asked them to fund something they didn't want to fund. I'd burn valuable time talking to them about things that were just obvious to them -- "how big a check do you like to write." So, when I found myself repeating things in meetings, I realized it was time to fix that problem. Also, we try to think like a founder here -- so many are software engineers, and if they repeat themselves, they automate it. Our manual, posted in full on GitHub (http://tiny.cc/manual) is our attempt at DRY -- don't repeat yourself -- we're automating the boring parts of our work away, which is sharing the basics.
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@anildash And, Anil, we so appreciated you taking us up on the offer to make our investment in you transparent, talking about terms, and how it came together. I took a page from you on how open you always are in your thoughts on things. #proudinvestor
Ryan Hoover@rrhoover · Founder, Product Hunt
Roy! I remember when we met nearly two years ago when Product Hunt was a side project. I asked you for fundraising advice (I was still debating what to do with this thing) and your response was very different than what someone might expect from an investor. Of course, the decision to fundraise is entirely contextual but in general, what advice would you give someone who's considering it?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@rrhoover I remember it vividly, since you knew so well what you wanted to do :) I often ask founders why they want venture money. The answer to that question is the number one reason why I do or don't fund someone... because so many people want it by default. You ask them and they have this stunned look like, what do you mean? That's the way to build a company! So many companies -- Bloomberg LP! -- were built without VC. There isn't some rule that if you want to build a company you need VC. The time to take VC is when it's the only way to build the kind of company you want -- one that puts growth above everything else, usually, and one that can't be funded another way (revenue, your own $, borrowing money, etc.). You knew you wanted to build this kind of business and, hats off to you, you did. Thanks for inviting me!
Ryan Hoover@rrhoover · Founder, Product Hunt
@roybahat thanks for joining us. 😊 And I couldn't agree more with your statement. It's "cool" to raise venture but taking investment is really only a path toward a bigger goal and it's usually not the only option founders have.
Erik Torenberg
Erik Torenberg@eriktorenberg · Former Product Hunt
Roy - Welcome! What's something you used to fervently believe that you now see as misguided?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@eriktorenberg When I started Beta, I was also working as chairman of the company I co-founded, OUYA. I used to think that was doable -- two jobs at once, really, in some ways (though my day job was v. clearly building Bloomberg Beta). Now, I realize that if you want to take care of yourself, and your family, then you have to just focus. It was grueling to do both together, and I wouldn't repeat that.
Kieran Snyder
Kieran Snyder@kieransnyder · CEO, Textio
Bloomberg Beta does some interesting annual research on the next set of founders likely to emerge. Can you say a little about your methodology? What variables do you model?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@kieransnyder Hi Kieran... we tried to predict who would start a company in the future, and it's a much more diverse group than the founders of today. (Yay.) We worked with UC Berkeley on it and the grad student who did the analysis basically found as many variables as he could that you could get consistently across everyone who works in tech -- professional history, education history, AngelList presence, etc. The #1 thing that mattered: had you worked in a venture-backed company before?
teropaananen
teropaananen@teropaananen
@roybahat @kieransnyder Doesn't concentrating on people who've already done the thing more than once just risk you missing the true "come out of left field" type of ideas?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@teropaananen @kieransnyder This is people who *worked for* a venture-backed company vs. starting one. I do think that startups are a profession, and this myth of coming out of nowhere is basically that. Still, of course the Zuckerbergs of the world are out there, and we need to find them, too. I hope that by expressing our intent to get to know people before they start companies, they'll seek us out. And I'd love to find a better way. I also think most of the best startups are *not* "come out of left field" ideas. They are steady iterations on the status quo. Facebook was one of many college social networks. Tesla was one of many attempts at an electric car. The doing is audacious, not the conceiving.
Eric Soelzer
Eric Soelzer@esoelzer · Co-founder, Gratify
Hey Roy! It's really hard to define a company culture while feverishly working to launch a product in a new startup environment. What advice do you have for people in this situation?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@esoelzer Awesome question. I think that when we talk about culture in companies we usually imagine lots of different things that Big Companies do... mission statements, written values, review processes, the physical look of the office, what events feel like, what language people use, etc. And, of course, culture *is* all that. At a startup, though, you can only do so much. So you have to layer it in... first, you start with the story of why you started the company. That's somewhat irreversible :) Then, it's the people you hire. Then, the software you choose to organize yourself. I shared this short presentation with some folks at Stanford about the choices you make to start layering in your culture gradually... curious what you think.... https://www.dropbox.com/s/hb4ql4...
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
And that's it for me folks, I'm going off to meet one of the "future founders" who we predicted would start a company that @kieransnyder mentioned earlier... THANK YOU for having me :)
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
Also excited for the @jhagel live chat in a couple of hours, go Product Hunt :) https://www.producthunt.com/live...
Lejla Bajgoric
Lejla Bajgoric@lejlahunts · Intern, Product Hunt
Thanks for being here :) Is there an end-goal you hope to achieve with the work you do?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@lejlahunts Thank you! What a great question. I hope to make business work better. I want it to be happier, less wasteful, more creative, more rewarding, more just. If I can support companies that do that, I'll be very happy.
Emily Hodgins@ems_hodge · Operations @ Product Hunt
What has been your proudest moment during your career?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@ems_hodge This is a hard one. I was really proud when OUYA launched on Kickstarter. So many people told us it would fail. The night before, an investor said to me, "you'll need 10,000 people to back you -- that's so many." Then he passed on investing. The next morning, a bunch of investors filled our inbox -- we had 10,000 people in less than two hours. That said, I understand why people were skeptical -- it was a very difficult startup to build. All credit to Julie Uhrman, the CEO. She is a superstar.
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@ems_hodge And, since I'm thinking about it now... this moment when I was in government was something, too. https://www.highly.co/hl/56214f1...
Emily Hodgins@ems_hodge · Operations @ Product Hunt
What advice would you give the 16/18/26 year old self? Is there anything you would have done differently?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@ems_hodge I didn't realize how inexpensive risk is at that age. At 16, I'd have learned to code. At 18, I'd have taken that job I was offered writing HTML (shows how smart I am). At 26, I was in a wonderful place -- working on rebuilding New York after 9/11, in city government, so I think I'd have just told myself to stop checking my Blackberry so much.
Melissa Joy Kong
Melissa Joy Kong@melissajoykong · Content, Product Hunt
I love Werewolf! @micah is DA BEST at it. In your opinion, what is the most inefficient thing companies in the B2B space currently do? B2C?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@melissajoykong @micah played with us last time, it was great. Hit me up if anyone wants to play... I'm a villager. Least efficient thing companies do is think wishfully when they could just test. As much as we've all read Lean Startup, and all, often we avoid testing things simply because it's scary -- the whole thing you've been pitching to yourself, your team, etc. might just. be. plain. wrong. Can't fear being wrong.
Melissa Joy Kong
Melissa Joy Kong@melissajoykong · Content, Product Hunt
Bloomberg Beta's GitHub page, under "What We Look For," says: "We recognize that seeing early signs of an outlier is hard, and nobody’s cracked how to do it reliably. What we want is a reason to tell ourselves that a startup has a chance to be extraordinary. There are a few areas we search for signs: certain qualities of a founding team, an early product, and the right moment in a company’s life." It *is* notoriously challenging to find an outlier early—probably because there are too many confounding variables. But, what do you think the difference is between the success trajectory of two competing companies—like Uber and Lyft—both of which are doing well, but one far outpacing the other? Is it the board? Investors? Grit of a founding team? So curious to hear your thoughts on what makes a startup surpass a tipping point.
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@melissajoykong So unknowable, and the game isn't over yet for them or any of those horseraces. I think it's more like a stew, where you can't point to one ingredient. That said, if you had to pick a single thing, I do think it's the CEO. The person who is ultimately in charge, whose (professional) life is on the line. That person's personality become the company's values, style becomes culture, preferences become policy. (And I'm a skeptic that it's the investors, even though I am one. We help, we push, we provide emotional support -- but the founders are the engines. They deserve every ounce of glory and more, and sometimes succeed despite us.)
Kevin Ayuque
Kevin Ayuque@kevinayuque
What do you think is the hardest part of building a video game console?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@kevinayuque Capital. A low-margin hardware business is hard. A software platform business is hard. Videogame consoles combine the two. We eventually had more games on OUYA than any other game console ever, but financing it proved to be the work of big companies (like Razer, that bought OUYA).
David Turner
David Turner@dturneresq · RSA Fellow
What do you think of transmedia storytelling, specifically with its implications for mass media entertainment?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@dturneresq I think the quality of a narrative is so tightly fused to its medium. Hard to take a single story across media. A single world? Sure. I love Star Wars video games as much as the next guy. What do you think?
David Turner
David Turner@dturneresq · RSA Fellow
@roybahat @dturneresq I think transmedia storytelling has some really promising attributes. Especially in a world of highly formulaic linear storytelling. I think cinema attendance is decreasing for a reason and I think that reason is that cinema goers aren't getting what they want from mainstream Hollywood cinema.
Manolo Espinosa
Manolo Espinosa@manolo · VP SoundCloud
How does your work background -- across the public and private sector -- make you a better investor ? And, what do you think of the recent work by The Information about racial and gender diversity in venture firms?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@manolo I *love* that The Information chose to take on diversity, and reward funds who are diverse. Since they called the list one about "the future" I wish they'd included more small funds -- like ours! The small funds of today are funding the companies of tomorrow. And, especially since I am the only white male partner in our fund, and we have two men and two women as partners (hi @karinklein, who runs New York for us, and @shivon here), I think our diversity helps us support better founders, and a wider range of them.
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@manolo (And as for my work background making me a better investor, I'm unsure if it does. I think that people who focus on startups as a profession for a long time tend to be awesome at startups. That said, the fact that I've seen some other parts of the world and how they work does help me connect startups to people, organizations, and places that they might not think matter to them... until they do. So I have a different network, a different view on the world, than folks who have been doing startups all along.)
Jacqueline von Tesmar
Jacqueline von Tesmar@jacqvon · Community at Product Hunt ⚡️
Hey Roy! Glad to have you here :) What is your biggest fear?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@jacqvon I wish I could say I was fearless. I'm working on it. I think my biggest fear is that our companies, our careers, etc. will merely be seen as "successful" without actually mattering. I used to think success was rising within an institution -- being the head of your company or whatever -- and now I think success is making and remaking the world around you. Starting with yourself, which is the hardest part. And then your family and friends.
Rutul Davè
Rutul Davè@letsfixtheworld · Cofounder, Bright Funds
Roy, what do you think are the hardest things in building a startup that founders often underestimate?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@letsfixtheworld Pain. They underestimate the pain. It's so easy to want off the train once you get on it, because the train punishes you. So I think more than 100% of my value add is emotional support -- just being there for a founder.
Gina Trapani
Gina Trapani@ginatrapani · Building software at Postlight
@roybahat @letsfixtheworld Confirming that more than 100% of Roy's value add is emotional support. Ask me how I know. :)
Alex Carter
Alex Carter@alexcartaz · Operations @ 60dB. Ex-PH Podcasts 😻
Hi Roy! Are you still passionate about podcasts? Do you have any specific thoughts on how the space will evolve in the next few years? What app or features do you personally wish you had?
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@alexcartaz Hi Alex... <3 the podcasts. The most intimate medium -- it's the closest thing we have to telepathy. I think we'll see wider experimentation in content. We have some successful genres, and it's remarkable how long it took for us to land on an episodic investigation, for example. I think there will be many, many more... so it's less about features to me right now and more about the content.
David Diamond
David Diamond@david_diam · Product designer
Hey Roy, what advice would you give to young, first-time founders on raising VC money? And other than having a great product, how do you recommend founders stand out amongst the crowd when pitching/ trying to get in contact with a potential investor
Roy Bahat
Roy Bahat@roybahat · Head, Bloomberg Beta
@david_diam Ah, it's hard. I failed to raise seed money for my own startup, which is why we went to Kickstarter. I think the question you need to be able to answer in your mind is this: "Why should a professional investor believe we have a chance to be extraordinary?" Too many people kid themselves answering that question. Because we worked at a company that did something similar, and we have a good idea! Because the market is really big! Etc. I often think of a startup's pitch like a description of a movie... just telling you "it's about blue aliens who fall in love, but one really isn't an alien it's a person controlling an alien" doesn't make it Avatar.
David Diamond
David Diamond@david_diam · Product designer
@roybahat Great answer, props on the Avatar analogy by the way! Thanks Roy 😀