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The Great Venture Capital Rotation

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A couple of years ago, I was chatting with a guy named Naval, who had a site called AngelList. He had a fiery passion for helping founders and an outsider’s chip on his shoulder.

He wasn’t taken very seriously in the industry, and the venture capitalists I spoke to dismissed him as somewhere between a loon and a jerk.

I literally heard a dozen VCs dismiss AngelList and Naval. They hated it. Some hated him. 

That’s when I knew he was going to change everything.

One VC you’ve never heard of famously deleted his AngelList account in a huff ( 

[I wonder if that VC – who turns out to be a nice guy – will ever do a follow up post?] 

Naval wasn’t a loon or a jerk; he was just three years ahead of everyone in seeing the power of decentralized funding – and it scared the living sh@#$t out of VCs.

So the petty VCs – especially the ones taking 12 weeks vacation while collecting 3% management fees and showing up late for board meetings – did everything they could to deride him. 

Last week he opened up a radical new platform called “AngelList Syndicates.” 

It’s basically a “pop-up” VC fund. 

Here’s how it works:

1. A “power angel” with a solid track record, who provides massive value, invites other angels to piggyback on his or her deals. 

2. AngelList manages that process and takes a 5% ‘carry’ for doing so. 

3. The “power angel” then gets a 15% carry. 

[Note: a carry is a percentage of the upside. So, if you invested $10k as a syndicate and it turned into $100k, there would be a $90k gain. So, 5% of that gain ($4.5k) would go to AngelList and 15% of that gain ($13.5k) to the super angel. This is fairly standard, with the top firms / fund managers getting 30-35% carry after years of proving themselves.] 


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LAUNCH's first fund, AngelList Syndicates & $100k prize for LAUNCH Mobile & Wearables

I’m super excited that I’ve closed my first formal angel investing fund: The LAUNCH Fund I. Additionally, I’ve started one of the first AngelList ‘Syndicates’ (more on that below).

The fund started when David Sacks and I each committed $250k over five years to the winners of the LAUNCH Festival, but it quickly grew to include a list of my good friends. On average, I’ve got 10-year (or longer) relationships with each of the members of the fund (we are leaving it up to the LPs to disclose that they’re in the fund, if they want to).

Over the next five years, we will invest $100-250k in 50-100 startups.

Next week, at the LAUNCH Mobile & Wearables event there will be a $100,000 ‘investment prize.’

[ Note: LAUNCH Mobile & Wearables is on Sept 30 & Oct 1st in San Francisco at the Metreon City View. A couple of tickets are left, use FOJ to get 20% off here: ]

What is an investment prize, you ask? Well, it’s a commitment from me to invest $100k in one of the startups there.

Of course, it’s not binding, as the startups need to want me as an investor, and we have to be able to come to terms, but I’m happy to say we came to terms with three of the winners from the LAUNCH Festival back in March 2013 (Wizzywig, AdStage and Boxbee).

At the LAUNCH Hackathon on November 8-10, I will be putting up another $100,000 ‘investment prize’ (at least). The hackathon is brought to you by the fine folks at Capital One, Yammer, Facebook, Parse, Pearson, Amazon & Google.

We already have over 300 developers signed up (we check their code on github – so no spectators!), and we think we’ll hit 1,000. If you want to help buy pizza or put up a prize for these fine folks hit reply and say ‘How can I help Jason?’

Also, our Hackathon will feature none of the offensive stuff that other hackathon recently had (read the gory details here:

Finally, I’m going to start syndicating my deals on AngelList.

So, if you missed being part of the LAUNCH Fund, you can simply follow me on AngelList and commit to putting $10k, or $25k, or whatever you want, alongside my investments. Of course, you (currently) have to be accredited and understand that investing in startups is a 90%+ exercise in failure, with the hopes of hitting an @uber once every 50 or 100 (which I was lucky enough to do!).

@jason on AngelList  

all the best @jason

PS -- Had a great interview on This Week in Startups with Ben Milne, the founder of Dwolla. Watch it here:

PPS - The remaining list of folks we haven’t had on the show: @elonmusk, @mcuban, @marissamayer, @reidhoffman, @markpincus, @billgates, @stevecase, @edyson, @pmarca, @timarmstrongaol, @bhorowitz, @jeffweiner, @tferriss, @sherylsandberg and @finkd among many others. Feel free to encourage them to come on the show here: [ you can edit the tweet before it goes out ]

PPPS - Special thanks to the following for sponsoring the LAUNCH Mobile & Wearables event: ExpediaHasOffers, Rackspace and Tandem.

PPPPS - LAUNCH co-working space has room for three more startups.
Please contact if you want to sit with me here in Culver City!


LAUNCH Mobile & Wearables is Approaching!

We’re just about two weeks away from the @LAUNCH Mobile & Wearables summit (Sept 30 and Oct 1, at the Metreon in San Francisco), and here’s some of what we have in store... 

1) 67 Incredible Speakers in 2 Awesome Formats:

Fireside Chats on the Main Stage

Here are some of the really great people who will be joining @jason onstage for fireside chats:

Dave Morin | Cofounder, CEO, Path (Oct 1)
Sean Rad | Founder, CEO, Tinder (Sept 30)
Tom Conrad | CTO, Pandora (Oct 1)
Chamath Palihapitiya | Founder, Managing Partner, Social + Capital Partnership (Oct 1)
Eric Migicovsky | Founder, CEO, Pebble (Sept 30)
Manish Jha | General Manager - Mobile, NFL (Oct 1)
Robert Occhialini | VP - Products, NBA Digital (Oct 1)

...and 22 more (see the full list here)

Power Lunches
Focused roundtable discussions, led by visionaries in the mobile space, including:

Jocelyn Mangan | VP, Consumer Product Management, OpenTable (Oct 1)
Dave Enberg | CTO Evernote (Sept 30)
Hicham Ratnani | Founder, CFO, Frank & Oak (Sept 30)

Alisa Gould-Simon | Cofounder, Pose (Sept 30)

Jeremy Wacksman | VP, Marketing & Mobile, Zillow (Oct 1)

Lars Fjeldsoe-Nielsen | Head of Mobile, Dropbox (Sept 30)
Michael Cerda | SVP, Product & Technology, VEVO (Oct 1)
...and 31 more (see the full list here)

2) Company and Product Debuts
10 companies will be launching brand new products on the main stage, with the opportunity to win a $100k investment prize from The LAUNCH Fund.

3) Continue the Conversation:

Dinner and cocktails, and a nightly poker tournament!

4) Thanks to our gracious partners helping us make this event happen:

* Xtreme Labs (

* DYN (

* Expedia (

* Factual (

* New Relic (

* Tandem (

There are still 2 partner spots remaining -- email for more info.

There’s still time to get your ticket. Use the code ‘mobilerocks’ and receive a 20% discount on registration. Register here.

More info about the event on our website:


Advice for Microsoft’s new CEO: Go All-in with Apps

tl;dr: Microsoft’s new CEO must make mobile work, and since Android and iOS have a huge lead, the best strategy is to buy the top 100+ apps on competing platforms while making Windows Phones zero margin like the Kindle.

Microsoft dominated desktop computing by relentless iteration.

Word, Excel and Windows were far behind WordPerfect, Lotus 1-2-3 and the Mac when they launched. But Microsoft grinded it over twenty years from the mid eighties until the 2000s.

And they won. Big time.

It’s time for Microsoft to grind it out again, and there is a clear analogy here: people don’t buy operating systems, they buy the apps that run on them.

For a time, typically early in a technology cycle, people are obsessed with hardware. But when hardware parity is reached – as it is today in smartphones – folks tend to focus again on apps.

In the ‘80s and ‘90s, people bought PCs based on their hard disk space, memory and CPUs. People actually knew the names and speed of their CPUs!

Now folks buy based on color.

On. Color.

Nokia was a great purchase for Microsoft because they got it at half price (they used offshore money that would have been taxed to all hell if repatriated), and they got a really sexy phone line in the Lumia.

Lumia phones blow the hardware profile of the iPhone out of the water, what with wireless charging and Carl Zeiss lenses.

Carl. Zeiss. Lenses.

Wireless. Charging.

They’ve had these awesome features for well over a year. They are stunning.

But they trail Samsung’s and iPhone’s by a significant margin.


It’s the apps.

Microsoft needs to drop everything and buy the top 100 apps on their competitors’ platforms. So, whatever the top apps are on Android and iOS, snap them up!

After you do, you keep building them for iOS and Android.

Things like Evernote, Sunrise and Tinder come to mind.


Four reasons:

1. Because if you buy them, you’ve instantly infected the iOS and Android ecosystems!

2. They’re proven.

3. You get talented people on your team who can build the next generations of apps.

4. You can start releasing new features first on Windows and get the halo effect for your platform.

Now, this is a five-year strategy, with the first two years buying and the last three exploiting.

If you have the brass to spend $7b on hardware that’s largely commoditized, you better have the brassier ones to double that on apps.

Apps are what matter.

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Advice for Building a Startup Inside Someone Else's Ecosystem: Don’t

"The cave is collapsing!" -- Leia Organa
"This is no cave." -- Han Solo

Here’s a composite of a three discussions I’ve had with whip-smart founders over the past couple of months about building companies on the backs of existing ecosystems like YouTube and Facebook.

“Jason, I’m building a startup around the @Youtube ecosystem -- which I know from your writing that you’ve got some issues with -- we want you to invest!” said the founder.

“That’s an awesome set of tools you’ve built there. Clever indeed. However, if any of them work, you know YouTube is going to copy them and make them free, right?” I replied.

“But YouTube is going to be 10x bigger than it is in the next five years... and you said if it was a stand-alone company it would be worth $50b!” he replied.

“I did say that, and that’s even more reason for you to be worried. As they get bigger and more powerful, they will have even more resources and rationale to rebuild your ideas -- and they will have an even bigger firehouse to spit it out to customers,” I said.

“But look at all the examples of huge companies built off of large ecosystems: Norton Antivirus on Windows is a Fortune 500 company, Hootsuite exploded on the back of Twitter and it has a $1b valuation, Buddy Media rocked Facebook and sold for $800M,” he said.

“You left out PayPal... built off the back of Ebay for billions and now the most valuable piece of the company,” I added.

Then I said, “Now, while all of the examples above are true, they are a small, small percentage of founders who were able to get escape velocity from the exogorth, the space slug in Star Wars that almost ate the Millennium Falcon.”  

Ironically, as I was having this discussion, I found out that YouTube had built a tool that did EXACTLY what one of the founders in the above composite had built: a tool to help you connect with your top YouTube fans!

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