Today concluded our meetings with companies, and may be considered one of my favorite and most packed days of the entire trip!
We started this Friday with clear skies and a visit to see Managing Director Steve Kishi at Hummer Winblad Venture Partners. Steve was so incredibly knowledgeable and was a perfect end to our visits this trip.
First, Steve gave us a sort of pitch that he would normally give to a potential lender. He showed us and told us about the seven funds that HWVP has had since its start back in the 90s. We learned about the funds and about the return rate (which averaged to about 48%, which meant that over the first 7 funds, they were averaging about that much more than the amount that was invested out to companies). We saw some of their key investments that have given them very large returns, such as Net Perceptions and Extensity, which are considered dragon companies. Steve told us he tends to not like the term "unicorn" because he thinks it is inaccurate to the companies true value, and therefore HWVP looks for companies that are software based only, and are at the EARLY stages of development, being less than 10 employees at that point in time.
It is important to recognize that the only way HWVP makes money at all is if a company gets bought out or they IPO (initial public offering). Because of this HWVP fund terms are somewhat loosely defined, for a company can span over a long or very short period of time before one of those things happen, key events can effect each fund.
I thought it was interesting how they had one very bad fund that saw a lost of money, and he explained the lessons that were learned from that experience (back in the 2000s) and why that means we are NOT in a bubble 2.0 (as Onset Ventures indicated to us). Steve showed us that we have learned from our mistakes, and there is no longer such a large gap between a companies actual worth and the amount that is actually invested in it. I found this point interesting and factually very sound. I wondered what it would be like to have Shomit and Steve in the same room debating this topic!
Steve also touched on data being the only real market today: he found that to not be true at all, although all successful companies today must instead leverage data wisely, but it does not need to be there actual product base.
The last few pieces of information came from advice about pitching to a VC and his main tips as to how to be better than 80% of the companies he interviews (he mentioned they hear hundreds of pitches a year, but only bring on a handful). These tips include: focus on your business model, not your product (by only dedicating one slide to the product, you have much more room to get the functionality of your business explained). You should have a bottom-up perspective on your impact on the market, instead of a top-down focus (avoiding phrases like "we only need 1% of the market"). He said that they hear people who are not necessarily brought in through connections, but it does help. You should understand who your interviewing with, what stage they focus in, and what their focus is.
Once he was done, we heard our last book report from Ryan, who told us the long tail, meaning the niche market, and how someone can be quite successful focusing on the niche market.
After that, we went to Alcatraz! For about $37 dollars, you get the ferry ride there and back, and can explore anything on the island. It was truly an experience to remember for me. We took a walk around the island before making our way up the hill to the prison and taking the audio tour. I felt so much history and learned so much about a place that means so much to American history to me. The walk through the prison was so powerful, and I found so much to be fascinating aspects of the prison that I never knew before. Plus an ex-prisoner was actually there signing books! It felt so surreal to shake hands with an ex-criminal of that prison.
We then walked around and saw remaining pieces of the civil war fort that was also on the island. I also learned a bit about how crucial that island was to Native American rights as they fought for their own freedom. I highly recommend the audio tour and any aspects about the Native American history there.
We then ferried back to the mainland, where we wandered to In-and-Out Burger for dinner before going to the Castro Theatre for the first night of their Noir City Film Festival, where they show Noir films made between 1940 and 1953. It was an atmosphere so unique to that theatre, as it is the birthplace of the genre of film, and definitely has its place as some of the most influential films in history. We saw I Wake Up Screaming and Among the Living, the former being a "Classy A" film and the latter being a "Trashy B" film. But they both had interesting aspects that made it a real treat to watch.
Golden Gate Bridge bike ride Saturday! Expect one or two more entries before departing for Minneapolis.
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