Things I Learned at the Crosslink Startup Investor Meeting

Recently, I got to attend the Crosslink Investor Meeting where partners of the firm spoke on what their seeing in the marketplace.

A couple key takeaways for me was that technology and the internet is still very early. Lots of room for growth and expansion as software eats the world. Second, some of the largest inflection points in a business are made when you get the right team. Never underestimate the power of the team.

Here are my notes.

Takeaways from The Crosslink Conference

Why We are Growth Equity focused

• Different investing and operational skill set than steady-state or slower-growth
• Moore’s law is open to everyone.
• In 14 years, Google has surpassed MSFT in market cap. Go where the growth is.
• The internet will expand to most all service businesses.

Characteristics of winning start-ups

• Market dynamics matter. Industries and macro trends are important.
• Winners make most of the profit. Be early. Be flexible.
• Many inflection points with winners. Again, be flexible.
• You must understand the value proposition.
• Many losers.
• Hard to value.
• The rate of change is changing faster and faster. Thus, the only ones who can keep up are those who are growing.

Building a company boils down to these four things:

• People
• Products
• Strategy
• Execution

View of the Market

• We expect a long road ahead
• Deleveraging underway – especially in financial and consumer
• We see stocks still inexpensive relative to bond yields since 2008
• Cyclical growth recovery is over. Thus, we have to be in growth companies.
• 10% a year for the next 3 years feels about right for the S&P

Eric Chin – Partner (and TakeLessons Board Member)

The questions we ask when investing:

• “What is your key differentiator? Your secret sauce?”
• “How defensible is the secret sauce?”
• Does it fit in our themes?

Saas

• Still very early. Less than 20% penetration.
• Supply chain, business intelligence, enterprise is a big area.
• Multiples are correlated with growth rates
• 30% growth = 6x revenues multiple
• Start with the end user in mind. Build software for the person who uses it the most. Usability is absolutely a must. If not, there’s no adoption.
• Celebrate simplicity of use.

Advertising Technologies

• Total advertising $175B market and growing. Online is now $40B.
• Brand Spend, Video, mobile emergence, and real-time bidding.
• MARIN Software had a great video that explains what they do. – Chris Lien, CEO. Good dude. Very smart.

Brian Grey – Bleacher Report

• Focus on building a brand
• Four D’s of fundraising: Discussion, Diligence, the Dance, the Drama – prepare for all four because they will happen – especially the drama.
• Choose investors carefully and wisely. Not all are on the same level.