Read more about how we’re thinking and where we’re investing here.

In recent years we have seen a big focus on establishing customer success teams across the SaaS B2B industry. The goal is about both (initial) conversion and (subsequent) retention. Make sure your customer understands and is as successful as possible in using your product, and your conversion rate will go up and your churn will go down. There’s no doubt that customer success plays a vital role, but there’s also a huge number of customers they will never reach, no matter how strong your customer success team and how carefully you craft each onboarding email. That’s because these users never get far enough into the product. They check out right away. One of my portfolio companies recently discovered through a variety of a/b tests that user engagement within the first 10 minutes is crucial for their product as there’s an exponential drop-off in engagement after that time. Given the amount of products, services, and technology competing for our attention, I imagine this is a similar trend across the SaaS space. If the benefits aren’t immediately obvious, it’s easy to move on to something else. Another take-away from those A/B tests was that there is a huge difference in conversions depending on the initial page shown during the onboarding process: people who were shown a page that was most relevant to solving their problems viewed more pages early on in their account life, completed more goals, and ultimately converted to a paid account at a higher rate. The big question for you is <em>how can you hook a customer in the first 10 minutes? </em>If you want to increase goal completion, customer success emails and sales outreach might be too late and reactive. Users need to get hooked early, or they’re gone.

There’s a lot of discussion these days about what the next breakout computing platform will be: wearables, the Internet of Things, Bitcoin, VR/AR, or something else that we haven’t heard about yet? I think VR/AR is a strong candidate, since it feels like a logical extension of our current computing platforms. Previous VR/AR attempts have failed because the technology wasn’t ready yet. However, we’re now seeing some good (albeit early) evidence that hardware and software are both advanced enough to deliver a solid VR/AR experience. There’s already a strong early adoption of Virtual Reality in gaming and entertainment. At this year’s Sundance, nine of the thirteen submissions in the New Frontier program featured VR. Oculus’ Story Studio released its <a href="http://www.theverge.com/2015/1/26/7919177/oculus-lost-virtual-reality-film-sundance">first short, <em>Lost</em></a>, and plans to put out four more VR cinema experiences this year. And the <a href="http://techcrunch.com/2015/02/01/what-it-feels-like/">Virtual Reality documentary, Project Syria</a>, is showing VR’s powerful ability to affect us emotionally by letting us walk in someone else’s shoes. VR dramatically enhances the experience in both gaming and entertainment applications. And unlike the challenges facing Google Glass adoption, it’s socially acceptable to wear a bulky VR headset in the privacy of your own home or theater. Beyond gaming and entertainment, we’re also seeing practical applications for VR as well, including trauma treatment and education. Using <a href="http://www.microsoft.com/microsoft-hololens/en-us">Microsoft’s HoloLens</a>, scientists at NASA’s Jet Propulsion Laboratory will soon be exploring Mars using holograms of Mars Rover images. They’ll be able to work as if they’re walking right on the surface of Mars. <strong><span style="text-decoration: underline;">The future outlook for VR/AR</span></strong> While I’m bullish on Virtual and Augmented Reality, some key questions need to be answered: <ol> <li><em>How long will it take to make the VR experience so solid and comfortable that you can spend hours with it? </em>Right now, VR is best suited for short experiences.</li> <li><em>How long will it take for VR/AR to cross over into mainstream adoption? </em>We’ll need to see smaller headsets and more affordable technology first.</li> <li><em>Who will win the VR/AR space: start-ups or incumbents? </em>Virtual Reality is one area where the big players are heavily investing their resources: Facebook/Oculus, Samsung, Google, and Microsoft. <a href="http://www.theverge.com/2014/11/26/7290601/apple-virtual-reality">Apple is apparently looking</a> for virtual reality app engineers. On the start-up side, <a href="http://www.wired.com/2015/01/magic-leaps-vision-for-virtual-reality/">Magic Leap</a> is working on something interesting in AR (while also raising over $500M in Series B).</li> <li><em>What are the productivity use cases? </em>It seems that the biggest opportunity for AR productivity tools centers around the non-desk workforce…as a way to give doctors, pilots, field technicians and other mobile workers the relevant information they need to do their job without having to break their concentration to look at a mobile device. Other opportunities exist for learning/teaching, video conferencing, etc. How quickly can these applications be developed and adopted, and what other use cases are out there?</li> </ol> It is still very early times for AR / VR and it will be exciting to watch this space over the coming years.

One of the best parts about having a strong portfolio filled with smart people is the wise advice that founders share with each other. In this case, one of V1’s portfolio companies has been looking to hire a VP of Sales and I asked Jon Zimmerman (<a href="https://twitter.com/jpzimmerman">@jpzimmerman</a>), CEO of <a href="https://frontdeskhq.com">Front Desk</a>, to share his experiences and insight on the matter. The resulting dialogue proved so thoughtful and valuable that I wanted to share parts of it with others who might be wondering if it’s time to hire a VP of Sales. From Jon… <strong>Figure out if you need a VP of Sales or a Director of Sales</strong> A Director of Sales is probably a sales team lead or manager in a sales organization. They can handle a team of up to 15-20 and run the "predictable revenue" playbook. If you have a repeatable sales process and just need someone who can scale transactional sales, this is the level you are hiring. They are easier to find and much cheaper. There are many candidates out there who can run the playbook. We looked at a lot of candidates like this, including some very strong ones. However, for us, this would have been the wrong hire. We lacked even a single strand of sales DNA and needed someone who had the ability to both execute and add sales DNA to the culture. <strong><em>The big question is whether you need someone who can "run the play" or someone who can "call the play."</em></strong> If you have a repeatable sales process, you can probably pull a manager or director from another SaaS company. However, if you need a VP type, then you are looking for someone very special. <strong>Don’t go it alone</strong> Unless you already have experience hiring a senior sales leader, then you should use a top-shelf recruiter and include a few people who have experience in the section process. I recognized quickly that I was totally ill-equipped to source and assess sales talent. Great sales leaders are as rare as rockstar developers. By definition, they are really good at selling (including themselves) and it is much harder than assessing engineers. We included the VP of Sales of another Version One portfolio company and a few of our board members on loops. <strong>Understand your economics before you hire</strong> If you hire a VP of Sales, I assume it is because you want to ramp up a sales team. This means you are hiring ahead of revenue. It is very easy to see with a simple spreadsheet how things can spin out of control if you get the economics upside down. <strong>Don’t underestimate the cultural fit</strong> I mentioned before that we previously lacked any sales DNA. On the spectrum of product-focus vs. sales-focus, we were 100% product-focus. Until recently it almost seemed like we felt bad when someone actually paid us for our service because we only saw the shortcomings. Two months post-hire, we have a much healthier balance of sales vs. product. <a class="zem_slink" title="Floodgate Fund" href="http://floodgate.com" rel="homepage">Mike Maples</a> (who sits on the Frontdesk board) made a great comment in reference to moving to a healthier sales versus product focus. He pointed at Sam Osman, another board member and a very successful entrepreneur with a strong sales focus. He said, "You need to inject a single strand of Sam Osman DNA without destroying the host." We've been lucky and made a great cultural fit. That said, I can totally see how the wrong sales leader can do a lot of damage. &nbsp; <em>Other resources</em> <a href="http://blog.close.io/how-to-hire-your-first-vp-sales-and-not-screw-it-up">How to hire your (First) VP Sales (And not screw it up)</a> <a href="http://www.saastr.com/2013/04/02/the-48-types-of-vp-sales-make-deadly-sure-you-hire-the-right-one/">The 48 Types of VP Sales. Make Deadly Sure You Hire the Right One.</a> <a href="http://saastr.quora.com/How-to-Hire-A-Great-VP-Sales-The-Full-Video-and-Transcript">How to Hire A Great VP Sales: The Full Video</a>

When entrepreneurs are thinking about an exit, they typically wonder if they should hire an investment bank to help with the process. Will a bank bring in new buyers and better terms, or will you just be sinking money into the bank’s coffers? Since I’m often asked about the process, I thought I’d break down my advice on when and how to hire an investment bank. <span style="text-decoration: underline;">The benefits: what an investment bank brings to the table</span> <span style="text-decoration: underline;"> </span>An investment bank creates value in two ways. <ul> <li>One, they can establish a competitive M&amp;A process that maximizes price. In short, you can get a better deal and more money than if you were negotiating or handling the process yourself.</li> <li>Two, they can introduce you to potential buyers outside of your network whom you never could have found otherwise.</li> </ul> In terms of the second point, keep in mind that only the top investment banks have these contacts and top banks will not consider a transaction deemed too small for their efforts. For the top notch global investment banks, this threshold is typically several hundreds of millions in expected outcome. Mid-market banks usually need an outcome of around $100m in order to play. If you don’t have that kind of exit potential, you should consider a smaller, local player. They likely won’t have the best contacts to bring you new potential buyers, but they could still do a great job on the process side to get you the best deal possible. <span style="text-decoration: underline;">What if you already have a potential buyer?</span> In reality, most companies are bought rather than sold. For example, a larger company makes an offer to buy one of its smaller partners or another startup that’s building something of interest. If this is your situation, you’ll need to weigh the pros and cons for hiring an investment bank: <ul> <li>On the one hand, you can save the fees (which are typically 1-2% of the transaction amount, depending on the size of the deal) by <strong>not</strong> hiring a bank. After all, the potential buyer has been identified, the process has already started, and it’s most likely exclusive.</li> <li>On the other hand, you can consider that 1% fee an investment in order to keep the buyer honest and treat you well. In addition, the bank’s transaction experience comes in handy to speed up the negotiation and due diligence process. Alternatively, you can turn to your VC to help you navigate this as they most likely have been through many transactions in the past.</li> </ul> <span style="text-decoration: underline;">How to hire a bank</span> If you decide to work with an investment bank, it’s best to hold a “beauty contest” where each bank pitches you on how they would approach your sale: for example, how will they position your company and build their list of target buyers. For each bank’s pitch, ask yourself the following questions. How well do they know our market and understand our value? How motivated are they to work with us: did senior people show up for the presentation or a handful of junior team members? In the end, you’ll need to decide for yourself whether hiring a bank will bring value and whether that value is worth the bank’s fee.

In November, I introduced some basic statistics to help startups <a href="https://www.versionone.vc/making-sense-data">make sense of their data</a>. Then last month, I described an <a href="https://www.versionone.vc/engagement-pyramid">engagement pyramid</a>, which organizes a user’s behavior in a hierarchy. It helps you identify the highest level of user engagement so that you can allocate resources to achieve that outcome. For this blog post, I thought I’d combine these concepts and illustrate how they work together with a fictional example. Specifically, I’m going to focus on correlation and then introduce conditional probability as the next step to not only understanding your data, but also coming up with actionable insights. <strong>A simple example of correlation</strong> Suppose we are building a social app with “favouriting”/”liking” capabilities and “posting” (text, photos, etc.) capabilities. We assume that favouriting has lower user friction than posting, and want to find out the statistical relationship between these two actions. We have collected the data below: <a href="https://gregburnison.ca/code/version1v/images/Users.jpg"><img class="size-medium wp-image-2345 aligncenter" src="https://gregburnison.ca/code/version1v/images/Users-250x300.jpg" alt="Users" width="250" height="300" /></a> If we plot the data and apply simple linear regression, we learn that the slope <em>m</em> is 0.417 and the R² value is 0.895 (see below and always remember to visualize your data: the <a href="http://en.wikipedia.org/wiki/Anscombe%27s_quartet">Anscombe’s quartet</a> will give you context as to why). <a href="https://gregburnison.ca/code/version1v/images/Chart.png"><img class="size-medium wp-image-2344 aligncenter" src="https://gregburnison.ca/code/version1v/images/Chart-500x265.png" alt="Chart" width="500" height="265" /></a> From this data, we can also calculate the Pearson correlation coefficient <em>p</em>, which is 0.946. In case you need to refresh your memory from <a href="https://www.versionone.vc/making-sense-data/">November’s post</a>, <em>p</em> shows the linear relationship between two sets of data (i.e. can the data be represented by a line?). Both <em>m</em> and <em>p</em> inform us of the strength of the linear relationship between favourites and posts. However, they also provide distinct information: <ul> <li>Assuming simple linear regression, the slope can be interpreted as the estimated change value in <em>Y</em> (posts) corresponding to one unit change of <em>X</em> (favourites). The strength of this relationship is R² (the closer to 1, the better the fit).</li> <li>The correlation coefficient is a bounded between -1 to 1. The closer the value is to 1, the closer the two variables are to a perfect linear relationship.</li> <li>Note that for a linear least squares regression with an estimated intercept term (as in this example), R²equals <em>p</em>².</li> </ul> Returning back to the example, there appears to be a significant linear correlation between favouriting and posting. Specifically, a correlation of 0.94 means that 89.5% (from 0.94²) of variability of posting can be described by favouriting (and vice versa). However, the shortfall of correlation is that it does not imply causation. Because we still don’t know whether favouriting lends itself to posting, we need to think about conditional probability. <strong>Probability 101</strong> Probability is the measure of the likeliness that an event will occur, and lies between 0 (impossibility) and 1 (certainty). Generally, probabilities can be described by the statistical number of outcomes considered favourable divided by the number of all outcomes. Some basic concepts: The probability of an event A is written as P(A). The opposite or complement of an event A is P(?). e.g. If A is the event of drawing a heart from a deck of cards, then P(A) = 13/52 = 1/4. So, the probability of not selecting a heart is P(?) = 1 - 1/4 = 3/4. If two events, A and B, are independent, then their joint probability (i.e. intersection) is P(A?B) = P(A)P(B). e.g. If two coins are flipped at the same time, the likelihood of both being heads is P(A?B) = 1/2 * 1/2 = 1/4. If event A or B occur in a single instance, this union denoted as P(A?B). If these events are mutually exclusive, then the probability of either happening is P(A?B) = P(A) + P(B). e.g.   The chance of drawing a heart (A) or a spade (B) from a deck of cards is P(A?B) = 1/4 + 1/4 = 1/2. If the events are not mutually exclusive, then P(A?B) = P(A) + P(B) - P(A?B). e.g. The chance of drawing a heart (A) or a face card (B) or one of both is P(A?B) = 13/52 + 12/52 - 3/52 = 11/26. <strong>Conditional probability</strong> The probability of some event A given the occurrence of some other event B is given by P(A|B) = P(A?B)/P(B) = P(B|A)P(A)/P(B). e.g. Suppose we have a bag with 10 blocks: 5 red and 5 blue. The probability of picking a red one in the first draw is 5/10 or 1/2 but upon taking a second block, the probability of it being either a red or blue depends on what was previously picked. If a red one was taken, then the probability of picking a red block again would be 4/9. Understanding the concept of conditional probability is critical because it is the foundation of Bayes’ Theorem and many machine learning algorithms. <strong>An example of conditional probability</strong> Returning to our data set above, we can compute the likelihood that a user will post given that s/he has favourited. However, to do this, we need more granular data; that is, instead of looking at the total number of favourites and posts for each user, we must consider each favourite, post, or favourite <em>and</em> post, as its own event (independent of the user). For instance, consider User 9 with a total of 9 favourites and 3 posts in (let’s say) 100 visits. His/her activity profile may look like this: <a href="https://gregburnison.ca/code/version1v/images/Visits.jpg"><img class="size-medium wp-image-2346 aligncenter" src="https://gregburnison.ca/code/version1v/images/Visits-229x300.jpg" alt="Visits" width="229" height="300" /></a> From here, we calculate: P(Favourite) = 9/100 = 0.09 P(Post) = 3/100 = 0.03 P(Favourite ? Post) = 2/100 = 0.02 Therefore, the conditional probability of this user posting something given that s/he has favourited something is approximately 22%: P(Post|Favourite) = P(Favourite ? Post) / P(Favourite) = 0.02/0.09 = 0.22 To find the overall probability of a user posting given that s/he has posted, you must count all activities for all visits for all users. Do not simply add the probabilities of each user. Finally, suppose we extend this example to compute the overall conditional probability and find it to be 0.75. Because this is strong, you can focus your efforts on influencing users to favourite since you know there is a high likelihood that they will also post.   You may even take advantage of the engagement pyramid and figure out the probability that someone will favourite given another lower barrier to entry activity (i.e. login). Conversely, if the probability is low, then you may want to focus on another activity. <strong>Closing</strong> It’s important to understand the relationship between two variables (correlation and dependence) but for more actionable results, you may want to consider looking at calculating probabilities (likelihood).

Just like <a href="https://www.versionone.vc/2013-review/">last year</a>, 2014 has been busy and eventful here at Version One. We added 8 new companies to our portfolio:  <a href="https://www.versionone.vc/announcing-latest-investment-clio/">Clio</a>, a cloud-based practice management platform for the legal industry; <a href="https://www.versionone.vc/introducing-latest-investment-dwellable/">Dwellable</a>, a mobile-first vacation rentals marketplace; <a href="https://www.versionone.vc/introducing-handup/">HandUp</a>, a donation platform that lets you give directly to a person in-need; <a href="https://www.versionone.vc/introducing-latest-investment-mattermark-big-data-comes-vc/">Mattermark</a>, an analytics platform for investing, partnering, selling and marketing; <a href="https://www.versionone.vc/introducing-shippo/">Shippo</a>, an e-commerce shipping solution; and 3 startups that have yet to announce their funding.  These new investments bring the total number of Version One companies to 22.  And similar to before, they join our portfolio that is dominated by SaaS (i.e. <a href="https://frontdeskhq.com/">Front Desk</a>, <a href="https://tophat.com/">Top Hat</a>), marketplaces (i.e. <a href="http://www.kinnek.com/">Kinnek</a>, <a href="https://www.tindie.com/">Tindie</a>) and platforms (i.e. <a href="http://figure1.com/">Figure 1</a>). Our other portfolio companies have also done well growing their businesses, enabling 11 of them to raise new rounds.  We participated in these follow-on deals to further support our founders. Collectively, the amount raised by all our companies this year was $160M. We remain geographically agnostic:  a 50-50 split between Canada and the US with the highest concentration in Toronto (6), SF/Bay Area (5) and Seattle (4). <strong><strong> <img class="aligncenter wp-image-2340 " src="https://gregburnison.ca/code/version1v/images/Portfolio-map-2014-700x525.jpg" alt="Portfolio map 2014" width="518" height="388" /></strong></strong> In October, we <a href="https://www.versionone.vc/announcing-version-one-fund-ii/">announced our second fund of $35M</a>.  With this new capital and looking ahead to the new year, we aim to sharpen our focus toward startups creating things that didn’t exist before.  Some of the themes that we are bullish about include mobile / full-stack marketplaces, mobile enterprise, healthcare, machine learning and artificial intelligence, Bitcoin and blockchain technology, and virtual reality.  And of course, we are excited about working with our founders and meeting new entrepreneurs as they strive to make a difference in our world. Lastly, most of what we do is not possible without the support of our LPs, our colleagues, our partners, our portfolio companies, our family and friends, and our followers.  Thank you for an incredible year! We wish everyone the happiest of holidays and all the best for 2015! - Boris &amp; Angela :) &nbsp;

One of the first blog posts that Boris shared with me when I was starting out is "<a href="http://avc.com/2011/06/dont-forget-your-logged-out-users/">Don’t forget your logged out users</a>" by Fred Wilson. Fred notes that with many social platforms, a huge number of their regular users don’t actually login because they are able to derive value from their services on a “logged out basis”. As a result, he advises entrepreneurs to build services for those users that lead to more engagement, ultimately motivating them to log in. <strong>But what happens once someone logs in?</strong> Fred describes the general 100/10/1 rule as applied to social platforms, where 1% of users will create content, 10% will engage with it, and 100% will consume it once they are logged in. This thinking inspired me to come up with a framework for a user engagement pyramid that I have been encouraging our portfolio founders to create for themselves. Too often, we are presented with a collection of acronyms: LTV, CAC, ARPU, MRR, GMV, etc. While these metrics provide a high-level view of the business, we know that they are vanity measures, symptomatic of what is going on behind the scenes. Instead, I like focusing on the core factors that drive the KPIs above. Take a few seconds to think about it. <em>What is the most important number to your business? What is the user activity or behaviour that you consider to be a measure of your success?</em> <strong>What is the user engagement pyramid?</strong> You can create one in two steps: <ol> <li>At the top, place the activity that you determine to be a sign of someone who is most engaged with your product. Typically, this is the factor driving your most important metrics.</li> <li>Next, consider all the other activities that someone can do, and place them in decreasing order from what is the hardest / has the most friction for someone to do / requires the most energy, to what is easiest.</li> </ol> For example, if we were to take a social network like Facebook or Twitter, we might end up with something that looks like the diagram below (n.b. I’ve tried to present this in the most generic way possible). Social networks know that “user-generated content is king”: the most active users (creators) who post status updates, photos, or links are going to drive others to come to the platform time and time again. They also understand that creators continue to be inspired when they are recognized for their contributions via shares, comments, favourites, etc., for their posts. Given this positive feedback loop, it becomes clear that the goal of these social networks is to move a logged in user up the pyramid. <a href="https://gregburnison.ca/code/version1v/images/pyramid.jpg"><img class="aligncenter wp-image-2336 " src="https://gregburnison.ca/code/version1v/images/pyramid.jpg" alt="pyramid" width="381" height="412" /></a> &nbsp; <strong>How is this beneficial?</strong> An engagement pyramid grounds your business metrics in something real. It drives home your ultimate user engagement and helps you develop the right processes to get there. By creating one, you can: <ul> <li>Determine whether the data you’re collecting is the data you actually need (i.e. a good sanity check).</li> <li>Learn what your users are doing and what it means to be engaged. This helps you differentiate between user types, instead of simply grouping all DAUs and MAUs together as “logged in”.</li> <li>See which activities are correlated with the highest level of engagement and then focus your efforts on getting those activities to happen. Note that not every user has to do every action (i.e. a user doesn’t need to comment on someone’s post in order to post their own content).</li> <li>Rally your team, and agree on and align to your mission. This is a great team-building exercise to make sure everyone is on the same page.</li> </ul> Keep in mind this engagement framework can also apply to marketplaces and SaaS companies. For marketplaces, you will probably have two pyramids – one for the buyer and one for the seller – and for SaaS, the pyramid likely maps closely to the sales funnel. In all cases, the idea is to come up with the right framework to quantitatively analyze your user data effectively and efficiently. I’d love to hear your thoughts and experiences on creating your own engagement pyramid. Feel free to share in the comments below.

The end of every year brings a proliferation of prediction lists. As we end an incredibly active 2014 in the tech/investment world, I am adding my own thoughts on what might be coming in 2015. <strong>A killer app for Bitcoin emerges</strong> We’ve seen Bitcoin adoption by major retailers like Overstock.com and Dell, but there’s still too much volatility and regulatory uncertainty for Bitcoin to be used as a mainstream currency in North America anytime soon. I have long believed that Bitcoin is a beautiful and powerful technology, with great developer adoption – but <a href="https://twitter.com/bwertz/status/511678396364247040">where are the apps</a> that solve real problems? We shouldn’t look for much traction with the current use case (payments in North America), as most consumers in North America don’t view the current payment system as broken and in need of a fix. Instead, look for a killer Bitcoin app to emerge elsewhere, like in international money transfers or remittances. <strong>Enterprise apps, driven by mobile and big data</strong> There are always a ton of new enterprise apps ever year, each hoping to be ‘the next big thing’ that changes the way we work. The common theme has been making apps more accessible (i.e. mobile) and smarter (i.e. machine learning and big data). Good examples are Slack for the first category and <a class="zem_slink" title="RelateIQ" href="http://www.relateiq.com/" rel="homepage">RelateIQ</a> for the second. Expect both of these trends to take off in a big way in 2015. <strong>Virtual Reality moves beyond gaming</strong> The game industry has been the first to really embrace the potential of VR; that’s why <a class="zem_slink" title="Oculus Rift" href="http://oculusvr.com/" rel="homepage">Oculus</a> first launched its public prototype of Rift at a gaming convention. However, VR is an incredibly exciting area that can reach far beyond gaming. This <a href="http://arstechnica.com/gaming/2014/10/beyond-oculus-the-vr-boom-is-everywhere-from-classrooms-to-therapy-couches/"><em>Ars Technica </em>article</a> describes a few examples from trauma treatment and classroom learning to marketing and film. In 2015, we will see the first major applications of VR outside the game industry. <strong>The “winner takes it all” dynamic accelerates</strong> This past year has brought accelerated funding rounds for emerging category leaders. As summarized in this <a href="http://techcrunch.com/2014/11/02/fundraising-acceleration-is-the-new-vc-investment-thesis/">TechCrunch article</a>, …”the biggest winners win by staggering amounts compared to their competitors. What used to be perceived as a 5x or 10x gap in valuation between the winner and a runner-up is now more widely seen as between 100x or even possibly 1000x.” In a start-up environment that’s noisier than ever, break-out companies have an increasingly easy job of raising tons of money at high valuations while the second and third runs in a category often struggle. This dynamic has just started to emerge and will accelerate through 2015. Those are some of the key areas we’ll be watching next year. What about you? Which technologies, trends, and areas do you think will break out in 2015?

You may have noticed that we recently revamped our website in conjunction with the Fund II launch. As we updated the content, we quickly discovered that many of the company descriptions on our Portfolio page were out of date. After all, startups iterate quickly, evolve, and even pivot.  Without actively managing their digital presence, messaging gets stale pretty fast. Around the same time, one of our portfolio companies emailed us with a communications package detailing their key messages: a narrative of what they value and do, how the app works, their funding and future plans. This document proved to be so effective and useful to us, we wanted to share the concept. Everyone understands the importance of consistent messaging. It’s crucial in building and maintaining your brand, as well as in rallying all stakeholders (employees, customers, partners, investors, etc.) to the company’s vision, mission and strategy.  As investors, we want to champion our companies in the way they want to be championed. Entrepreneurs spend a lot of time reflecting on their brand and image. For example, you may have thoughtfully crafted every word in your latest press release or bio from a recent event. Don’t let those efforts go to waste. Make sure all the latest and greatest messaging is incorporated into every public profile. The first step is to take stock of where profiles are posted: your own website, Crunchbase, AngelList, Facebook, LinkedIn, Twitter, investors’ websites, etc. Then, whenever you change your messaging, make sure each of these profiles get updated. <ul> <li><strong>Tip 1</strong>: You can create a one-page Google doc that you can share with all your key stakeholders, like investors. The document will evolve over time, but you can always point people to it when needed.</li> <li><strong>Tip 2</strong>: To ensure people say the right things about your company, put together company descriptions in 25-word, 50-word, and 100-word variations.</li> </ul> These days, companies and people have profiles scattered across the Web. However, a little proactive maintenance will keep everything in line. When people see a consistent message behind your brand, it reinforces your unique selling proposition in their eyes.  <strong> </strong>

In the course of your career or start-up, nothing is more powerful than catching a big wave at the right time. I was reminded of this as we celebrated the 25^th anniversary of the fall of the Berlin Wall on November 9th. I was 16 and living in (West) Germany when the wall was torn down. The reunification that followed less than a year later brought tremendous optimism to Germany. The combined country was suddenly 20% larger and there were opportunities everywhere to turn around the East German economy that had been so badly managed for nearly 50 years. I was still in high school at the time, so this wave came too early for me to catch, but many Germans took advantage of the opportunity and did very well for themselves. Luckily enough, a much, much bigger wave came only a decade later…the Internet. The timing was perfect: I had just finished my PhD and was about to start a good corporate job. I looked around and saw all the enthusiasm surrounding this new technology. Start-ups were leveraging the Web to create completely new businesses. I needed to be a part of it. Practically overnight, I decided to forego the safety of my corporate job offer and just a few weeks later, I started a company with four other founders (this was <a class="zem_slink" title="JustBooks" href="http://www.justbooks.de/" rel="homepage">JustBooks</a>, which later became <a class="zem_slink" title="AbeBooks" href="http://www.abebooks.com" rel="homepage">AbeBooks</a> and is now a part of <a class="zem_slink" title="Amazon" href="http://amazon.com/" rel="homepage">Amazon</a>). It’s fifteen years later and I am still riding this same wave, although it has since morphed from the Web to Mobile. I may be an investor not an entrepreneur now, but I recognize that my opportunities today are a continuation of that first wave years ago. If you see a big wave coming your way (or out on the horizon), don’t hesitate to swim out to it. Big waves don’t come along too often in your lifetime and they have the power to change everything.

The relationship between entrepreneurs and investors is never an easy one - like in a marriage, you have to work every day on making it better and more productive for both sides. So it put a real smile on my face when I got this email from an entrepreneur this morning whose company we just backed (actually our first investment in our <a title="Announcing Version One Fund II" href="https://www.versionone.vc/announcing-version-one-fund-ii/">second fund</a>): <blockquote> <div class="gmail_default">Thank you for the vote of confidence. We want to be the best founders you've ever worked with, and with this in mind, it would be great to discuss what our expectations are for our working relationship moving forward. From our perspective, we believe that the decisions that will maximize our company's success are often a product of friction. So in addition to being coached, we look forward to being challenged by you.</div></blockquote> <p class="gmail_default">Finding the right balance between supporting, coaching and challenging an entrepreneur is what we thrive for every day and I hope it pays off for our founders.</p>

On behalf of our team at Version One, I am incredibly excited to announce that we have just closed our second fund. Version One Fund II is $35M, slightly larger than our initial fund. In many ways, Version One Fund II is identical to Fund I. It’s the same investing team (myself in Vancouver and Angela in the Bay Area), roughly the same areas of focus, and the same commitment to being the most active and value-add investor at the table. We will continue to invest in early-stage companies (seed and Series A rounds).  However, since this new infusion of capital is slightly larger than Fund I, we now have the ability to lead more seed rounds and have more dry powder to support our entrepreneurs as they scale. Fund I investments were dominated by marketplaces/platforms and SaaS, with selective investments in e-commerce plays. The first two categories represented 90% of our investments in Fund I. This focus will largely continue on with Fund II. While we continue to be excited about all things mobile (marketplaces and SaaS), we will make a larger push into key areas like <a href="https://www.versionone.vc/thesis-update-healthcare">healthcare</a>, cryptocurrencies, and <a href="http://venturebeat.com/2014/07/25/government-2-0-can-open-data-and-crowdfunding-save-democracy">Government 2.0</a>. We primarily look for the best teams to solve big problems in a unique way. With Fund II, we are also sharpening our focus toward those startups creating things which didn’t exist before. It’s often not enough to make something faster, cheaper, or better. We are looking for entrepreneurs with a bold vision… those who want to disrupt big categories or create entirely new ones. And much of our own vision is reflected in a newly renovated website. As I look back over the past two and a half years since we raised Fund I, I realize how lucky I am to have the opportunity to back and work with twenty amazing teams. Our companies’ collective valuation now sits at a stunning $600 million and they have gone on to raise over $130 million since we first invested in them. Looking ahead, I believe there are exciting innovations and breakthroughs on the horizon. With Fund II closed, we’re in a position to do much more.  A big thanks to our existing investors for their continued support and we warmly welcome the new investors joining us for the second fund.

Over the years as an investor, I have come to realize just how much a start-ups’s DNA is driven by the original founders. The personalities, strengths, and focus of those first founders shape a business long after the individuals have moved on. In the early days, it is incredibly hard for a founding team to fill any holes by bringing someone aboard from the outside. That’s because few start-ups are in the position to pay a top executive’s salary or deliver the upside they are looking for. This makes it all the more critical to have a well-rounded founding team that covers most of the bases. As an example, sales is key to most start-up’s success, so the founding team needs to include someone who loves to hustle for the sale – whether or not he or she has been formally trained or has any experience in sales. Once you have millions in revenue, you can hire a VP of Sales to take things to the next level. But until then, your founding team needs to take matters into its own hands. When we are evaluating start-ups, we look for several key ingredients in the founding team. This includes both innate sensibilities and the ability to execute on them… <ul> <li>Product</li> <li>Design/UI</li> <li>Marketing/storytelling</li> <li>Technical chops (for highly technical products)</li> </ul> When you are putting the band together, think about everyone’s skills and expertise. Do the skill sets complement one another? Are there any major weaknesses? A team of three marketing/business-oriented people is just as bad as three techies who don’t know how to sell or position their product. The founding team represents the people who will carry the start-up at the beginning. In the first few years, you need to play the cards you are dealt, so be sure to stack the deck as much as possible from the start.

<a class="zem_slink" title="Rick Perreault" href="http://www.crunchbase.com/person/rick-perreault" rel="crunchbase">Rick Perreault</a> of my portfolio company <a class="zem_slink" title="Unbounce" href="http://Unbounce.com" rel="homepage">Unbounce</a> recently called my attention to an interesting comparison between two SaaS models: <a href="https://blog.serps.com/hubspot-moz-a-tale-of-two-very-different-saas-business-models/">Hubspot &amp; Moz – A Tale of Two (Very Different) SaaS Business Models</a>. At first glance, <a class="zem_slink" title="HubSpot" href="http://hubspot.com" rel="homepage">Hubspot</a> and Moz are very similar companies: both are popular marketing platforms, use web-based subscription models, and primarily target the SMB market (although larger brands use both). However, as Scott Krager points out in his post, the companies have vastly different approaches for generating revenue. You can read <a href="https://blog.serps.com/author/pwpadmin/">Krager’s article</a> for all the figures (many of which are from Hubspot’s S1 SEC filing and from Moz directly), but here are some of the key differences: <ul> <li>Hubspot spends $11,233 to acquire a new customer. Moz spends $131 to acquire a new customer</li> <li>Hubspot’s average revenue per customer: $8,670 per year. Moz’ average revenue per customer: $1,295 per year</li> <li>Hubspot made $161.8 million from 2009-2013. Moz made $72.5 million from 2009-2013</li> </ul> Hubspot has grown revenue much faster than Moz, but has also spent much more to do so. Its customer acquisition costs are roughly 85 times that of Moz (if Krager’s figures are accurately comparing apples to apples). So, is one company right? The answer is no. Since investors (whether private or public) like to see growth, Hubspot’s story is more impressive from that standpoint. Likely, Hubspot’s founders and investors pushed for market growth and dominance regardless of cost. After the IPO, they can recover those losses. However, Hubspot’s high-flying approach is much higher risk and harder to execute on. Things are great as long as you can maintain growth. As soon as your business stops growing, your valuation multiples come crashing down and you can be in serious trouble. The right strategy all depends on the comfort level of the founder team and where they want to play on the risk/reward scale.

Finding the right engineer, UX designer or marketer can make all the difference for your start-up. After all, the caliber of talent makes or breaks a company, no matter its size. But recruiting is hard, particularly in these bubbly times when top tech talent can pretty much go wherever they choose. This hiring challenge has pushed several startups to get creative and take an innovative approach to recruiting. Here are a few examples: 1. Look for acquired teams Today’s trend of <a href="http://www.cbinsights.com/blog/tech-acquihire-report/">acqui-hires</a> can result in some dissatisfied technical teams post acquisition. Engineers who were attracted to the pace and dynamics of a start-up can get bored and frustrated with life in a big, public company. After a few years, they might be ready to move on. If you look hard enough, you might find really smart teams with a history of working well together who are willing to jump over to your start-up. 2. Run a contest Put together a really hard problem to solve and run it as your own contest, or use a platform like <a href="https://www.hackerrank.com">HackerRank</a> or <a href="http://talentbuddy.co">Talentbuddy</a>. These are good avenues for finding very smart people in your vertical, particularly global or small market candidates who may not be visible otherwise. A well-known example was the <a href="http://venturebeat.com/2012/06/09/quixey-gamifies-job-hunting-in-an-entirely-new-way/">Quixey Challenge</a>, where Palo Alto-based Quixey offered a monthly programming contest. Anyone who could solve the coding puzzle in less than a minute won $100 and a Quixey t-shirt. The contest cost Quixey about $10,000 each month, but that’s far less than what it might cost to hire a good engineer through a recruiter. 3. Onshore immigrant employees in Canada It’s no secret that there’s a shortage of H1-B visas for highly skilled workers in the U.S. That’s one reason there’s a growing trend for tech companies to <a href="http://www.businessweek.com/articles/2014-05-22/vancouver-welcomes-tech-companies-hampered-by-u-dot-s-dot-work-visa-caps">open offices in Canada</a>, as Canada is willing to grant visas to practically any highly skilled worker with a salaried job. Last year Facebook opened a temporary office in Vancouver to train newly hired developers while they wait for U.S. visas. Likewise, Microsoft (which applied for about twice the H-1B visas it received for 2015) opened a Vancouver office where they’ll hire and train about 400 software developers. Those are high profile examples, but many smaller companies are adopting this strategy as well. 4. Acquire a smaller development shop If you are looking to build out an entire team or department, you can always look into making your own acquisition. For example, <a href="http://techcrunch.com/2013/08/01/shopify-acquires-toronto-based-design-firm-jet-cooper-to-help-it-remake-ecommerce/">Shopify acquired Jet Cooper</a>, one of Canada’s top user experience and design firms. Look for an agency or firm specializing in whatever core competency you need to fill. The bottom line is every start-up needs good talent and you can’t sit around and wait for the perfect hire to walk through your doors. Get creative in order to bring the best talent to you.

There are many great articles that outline <em>what</em> an entrepreneur should cover during a pitch, but very few discuss <em>how</em> to deliver that message in a compelling manner. That’s why I wrote, “<a href="https://www.versionone.vc/good-story-key-to-pitch/">A good story is the key to any pitch</a>”, earlier this year. I thought I’d revisit this topic with my visual guide to storytelling. At nearly every meeting with an entrepreneur or fellow investor, I’m asked what we are looking for when we evaluate an investment opportunity. The obvious answer is <a href="http://www.inc.com/will-yakowicz/boris-wertz-5-entrepreneurial-traits.html">a stellar team</a>, but there’s more to it than that. Below, I’ve drawn how I map a typical checklist into a framework to help you better understand what we are listening for in a pitch. <center><a href="https://gregburnison.ca/code/version1v/images/Storytelling.0011.jpg"><img class="alignnone wp-image-2157 size-large" src="https://gregburnison.ca/code/version1v/images/Storytelling.0011-700x525.jpg" alt="Storytelling.001" width="700" height="525" /></a></center>So how do you go about painting this picture during your pitch?  Here are some tips: <ul> <li><strong>Start by sharing your vision (the “Why”)</strong>.  I like knowing why a founder is building his or her business. I get excited when I can understand and align myself with the founder’s motivations, values, and overarching views or perspectives of the world. That’s why conveying your vision is the best way to set the stage for your pitch.</li> </ul> <ul> <li><strong>Describe and demo what you’ve build so far (the “What”)</strong>.  The initial validation of your grander vision is your MVP. I always recommend going through a short demo of your product because it provides grounding for your future goals and helps us answer that vital question:  is it possible to be a category leader or is it an unrealistic pipedream?  At Version One, we rarely invest at the ideation stage.  We want to see traction – specifically, how quickly you can capture the initial market or vertical** that you are targeting, and how engaged these early users are.</li> </ul> <ul> <li><strong>Walk through your plan for growth (the “How”)</strong>.  After you demonstrate your strong sense of product design and development, we want to know how you will build a real business beyond just features.  The core questions to answer are therefore on distribution and scale, and on your <a href="https://gist.github.com/ndarville/4295324">business model</a>.  Some example questions include: <em>what are your strategies for customer acquisition?  Paid or organic via network effects? What does your inbound and outbound sales pipeline and process look like?  How can you expand TAM**?  How do you move from building for an underserved user who is most passionate about your product to a greater audience in a more competitive space? Do you </em><a href="https://www.versionone.vc/selling-enterprise-sell-vs-sell-many/"><em>“sell to few” or “sell to many”</em></a><em>?  And how does your product evolve into your grander vision (i.e. your product roadmap)?  </em>We know that a lot changes in a startup’s lifecycle.  While we won’t hold founders to every answer, we certainly want to understand how they think about their business and the opportunities ahead.</li> </ul> **Note:  I’m using the word ”market” or ”vertical” which applies to companies that can expand this way (i.e. Amazon, eBay, etc.).  However, this diagram is still applicable for platforms where there is expansion from a niche audience (by demography, geography) to the masses, and for SaaS, expansion from an individual user or SMB to the enterprise. <strong>Pitch your why, what, and how</strong> Many entrepreneurs make the mistake of pitching to an investor in the same way they sell to a customer. Yes, we invest in companies that are solving a real pain point for the customer and it’s important for us to understand that pain point and how you help. However, we’re investing in the future in addition to what you’ve already built. Sell the “what” as proof that you are onto something big, but always keep in mind that investors are buying into the “why.” There is no doubt that you have epic plans on how you are going to make it happen, now just let us know.

Shipping is a huge pain point for smaller e-commerce businesses of any size. They don’t process enough volume to grant them bulk discounts from the major providers. It's costly and resource-intensive to work with shipping carriers, and the barrier to entry is extremely high. Prices aren’t transparent and negotiating as a small business is next to impossible. Shipping is one of those unsexy, not-often-talked-about areas that is critical to an e-tailer’s bottom line. While most e-commerce companies these days use an existing payment solution (PayPal, Stripe, Balanced, etc.) to handle payment processing, they are still handling the shipping aspects on their own. That’s why we are so excited about our latest investment, <a href="https://goshippo.com">Shippo</a>.  They simplify shipping by giving e-commerce stores one streamlined solution to work with different shipping providers at once.  They provide an API that connects online stores to all the relevant shipping providers both locally and internationally.  This allows Shippo to leverage economies of scale to pass on discounts. At the moment, Shippo offers up to 80% off compared to retail prices. The opportunity is huge as the shipping industry related to e-commerce is $360B in the US and Western Europe alone. The annual rate at which e-commerce is growing is 20%. Other mashup APIs already exist that aggregate data from different carriers, but there’s yet to be any clear winner in the space. We believe that Shippo offers the right algorithm, API, and web interface to change the game for mid-sized e-commerce shipping. The ultimate vision is to do what ITA did for the air flight industry: create the technology to enable dynamic pricing in the shipping industry and make shipping cheap, easy and efficient, across the world. E-commerce businesses can either use Shippo’s apps or API to get shipping rates and labels within minutes. It offers direct integration with shopping cart platforms like Shopify, Etsy, Magento, and Bigcommerce. Or, developers can integrate the Shippo API directly to their own website. Since Shippo negotiates pricing by aggregating its users, the more e-commerce companies that join Shippo, the greater the discounts for everyone. Co-founders Laura Behrens Wu (CEO) and Simon Kreuz (CTO) launched Shippo in October 2013 and the company has already seen intense growth since launch. Laura and Simon are first-time entrepreneurs and alumni of <a href="http://500.co/batch-8-announcement">500 Startups (Batch 8)</a>. We are thrilled to be investing alongside SoftTech VC with participation from 500 Startups LP, Accelerate FC, Funders Club, East Ventures Investment LP, Mena Ventures Investment, DBF Digital Business Factory, Slow Ventures, Joanne Wilson, Fabrice Grinda, Dave Shen, and Karl Jacob. To learn more, visit <a href="https://goshippo.com/">https://goshippo.com/</a> or follow @goshippo on <a href="https://twitter.com/goshippo">Twitter</a>. &nbsp;

How does your startup think about innovation? Is it a new feature that gets incorporated into the next release? Is it a new market breakthrough that’s years away? I recently held a mini <a href="https://twitter.com/bwertz/status/510553658782928896">Tweetstorm</a> where I opened the conversation to innovation across three horizons: short-term, mid-term, and long-term. Here’s more dissection on the topic beyond 140 characters… <strong>Horizon 1: Short-term</strong> Horizon 1 innovations are incremental…the hundreds of little tweaks and improvements that your company implements every day or week to stay ahead of the curve (mostly done through many a/b tests at the same time). For example, you might change out the processor to make your product faster and cheaper. You improve the UX on your mobile app to increase your users’ engagement. You optimize your home page to increase sign-up conversions. Since they’re on a smaller, incremental scale, horizon 1 innovations are the most achievable. However, just because they are easy doesn’t mean they aren’t significant to your startup’s success. These everyday improvements are critical to keeping your customer base happy and maintaining your competitive edge in the current market. <strong>Horizon 2: Mid-term</strong> To stay relevant in your market over the years, you need to place bigger bets that redefine your business and/or open up completely new opportunities. These are horizon 2 (mid-term) innovations. For example, Apple’s recently announced Apple Watch; <a class="zem_slink" title="Kindle Wireless Reading Device, Wi-Fi, 6&quot; Display, Graphite - Latest Generation" href="http://www.amazon.com/Kindle-Wireless-Reader-Wifi-Graphite/dp/B002Y27P3M%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dzem-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3DB002Y27P3M" rel="amazon">Amazon’s Kindle</a>; <a class="zem_slink" title="Faceboo" href="http://www.facebook.com" rel="homepage">Facebook</a>’s introduction of a newsfeed several years ago. Although these innovations can relate to your existing product or business focus (i.e. digital books vs physical books), horizon 2 innovations are bigger ideas that take place outside of your existing products’ budget and activities. And while you don’t necessarily want to assign a specific timeline to each horizon, these mid-term innovations probably won’t generate revenue until 3-5 years out. <strong>Horizon 3: Long-term</strong> To build a truly great company, you will need to define a brand new market category. These innovations are often described as breakthrough, disruptive, and discontinuities. They represent totally out-of-the-box ideas that aren’t extensions of your existing products or services. Good examples of long-term innovations are <a class="zem_slink" title="Google Glass" href="http://www.google.com/glass/start/" rel="homepage">Google Glass</a> and their work on a driverless car; Amazon's AWS; or when Apple launched <a class="zem_slink" title="IPad" href="http://www.apple.com/ipad/" rel="homepage">the iPad</a> and created a completely new category. Horizon 3 innovations require a clear vision, along with the stubbornness to achieve that vision in the face of challenges and short-term priorities. <a class="zem_slink" title="Jeff Bezos" href="http://www.crunchbase.com/person/jeff-bezos" rel="crunchbase">Jeff Bezos</a> admitted that it took them three tries to get their third-party seller business to work. Today, there are more than <a href="http://www.businessinsider.com/amazon-warehouse-third-party-sellers-2014-6#ixzz3DOi2fQIt">2 million third-party vendors</a> on Amazon, accounting for about 40% of all items sold. It’s not easy to make such a market breakthrough…it takes discipline to invest in something that may not come to fruition for many, many years. But if you’re looking for motivation, Jeff Bezos summed up the opportunity perfectly in an <a href="http://www.wired.com/2011/11/ff_bezos/all/1">interview with Wired</a> back in 2011: “If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people. But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that.” The very best companies (Facebook, Apple, Amazon, and <a class="zem_slink" title="Google" href="http://www.google.com" rel="homepage">Google</a>) excel in all three dimensions. To be wildly successful, you cannot sacrifice your long-term vision for short-term success just as you can’t sacrifice your current product and customer base for your long-term vision.

With the influx of seed money, much has been written about the fact that start-ups that are taking far more funding than they need. For example, check out <a href="http://avc.com/2014/06/what-seed-financing-is-for/">Fred Wilson’s post</a> where he compares funding a start-up to walking up a flight of stairs. When building a company, it’s smarter to hit each step on the way up rather than jumping over three, landing on the fourth, and potentially falling all the way down. I know. Being swamped with funding is a problem that most early stage companies would love to have. However, as an investor watching my portfolio companies and other start-ups in the market, I can see how large rounds negatively impact the culture of budding business. On a personal note, I’m the first to admit that we had too much funding with my start-up back in the days. What’s the issue with too much funding? Here are four key drawbacks: Pitfall 1: Solving every problem with non-scalable hacks At the beginning, it’s important to do things that don’t scale, especially when it comes to customer acquisition. As <a href="http://paulgraham.com/ds.html">Paul Graham said</a>, “startups take off because the founders make them take off. There may be a handful that just grew by themselves, but usually it takes some sort of push to get them going.” In the early days, you’re going to go through a lot of manual, laborious steps to get things moving. And that’s okay. However, this mindset becomes a liability when every problem gets solved by manual hacks instead of scalable solutions. Companies with limited funds are more invested in finding those highly scalable, no-touch solutions that are needed to rapidly grow. Pitfall #2: Losing creativity Some of the world’s best ideas are born from necessity. When you have the luxury of abundant resources, you lose the creative push to make something happen out of nothing. A perfect example is when businesses are suddenly flooded with cash, they opt to buy the biggest trade show booth rather than thinking of creative ways to gain attention via smart guerilla marketing around the expo center. Pitfall #3: Tackling too many things at the same time Every start-up will have more opportunities than they can possibly tackle. The most successful start-ups and founders are those that limit themselves to being very good at the right things. Too much funding removes the natural limit on how many opportunities you can go after. The result is an unfocused business that is haphazardly working on many projects and is mediocre at all of them. I’ve seen many start-ups rush to hire new staff and tackle brand new verticals or international markets when it’s just not time yet. Pitfall #4: Culture of “we’ve done it” Funding rounds are only intermediate steps on the way to building a great, lasting company. The problem with a large funding round is that it can change the company culture from the scrappy challenger to “we made it.” Companies lose that hard-working, aggressive ethos and take on a more complacent, free-spending attitude. For an example of how to do it right, I’m always amazed at how <a class="zem_slink" title="Jeff Bezos" href="http://www.crunchbase.com/person/jeff-bezos" rel="crunchbase">Jeff Bezos</a> has managed to keep a start-up culture at <a class="zem_slink" title="Amazon" href="http://amazon.com/" rel="homepage">Amazon</a> despite it’s being a billion dollar company. Amazon is known for its peculiarities. The desks are re-purposed doors and some senior executives still take the train to the airport instead of a cab or limo. <strong>Final thoughts: Too much of a good thing…</strong> I’m sure I won’t convince every entrepreneur to turn down the cash. And certainly, there are times when it’s wise to take a huge round (such as to protect yourself from a potential downturn). If you do take on too much money early on, congratulations on the success- but be aware of the potential consequences and manage them proactively. &nbsp;

Today marks my first full year in VC at Version One.  Over this time, I have grown so much and am happy to report that being an investor is still very much <a href="https://www.versionone.vc/why-venture-capital-is-the-perfect-fit-for-me/">aligned with my core values</a>. As I reflect on the past year, I want to share what I have discovered about these 3 <a href="https://www.versionone.vc/values-lead-the-way/">core values</a>: learning, compassion, and freedom. <strong>Continuous learning</strong> I believe that the more we know, the better our decisions are. I love being in VC because I get the opportunity to learn about new technologies and industries every day. The challenge is to push myself to learn faster and smarter. <em>What I’ve learned about learning at Version One: </em> Working on my PhD, I learned how to learn. I never anticipated how helpful or relevant my research skills would be in VC. At Version One, we aim to be as thesis-driven as possible.  Each month, we pick an up-and-coming vertical or theme and do a deep dive (with the help of <a href="http://mattermark.com">Mattermark</a> - portfolio plug). We create a market map to identify where there are opportunities for disruption and ask ourselves: if we were to build a company in this particular space, what would it look like? In other words, we try to figure out what a winner in the space looks like, then assess whether it would fit our fund. We may not always be right, but it’s important to have conviction. And being thesis-driven makes us more efficient when filtering through all the startups we see. <strong>Compassion</strong> In addition to developing our investment thesis, we recognize that VC is still an industry built on relationships. My favorite part about being an investor is working with our portfolio companies, as well as other investors and entrepreneurs. I continually remind myself how lucky I am to get to be around people who are super smart, super passionate, and super courageous. These entrepreneurs constantly inspire me and in return, I aim to be as helpful and as kind as I can be. <em>What I’ve learned about being compassionate: </em> The first (and hardest) lesson I learned was that it is simply impossible to help everyone. We invest in 5-6 new companies a year, out of the 1,000+ that we see. In the beginning, I fell in love with every new idea, making it very difficult to pass on someone because they don’t fit our fund. Saying "no" is the least desirable part of the job, but I try to provide the most honest and specific feedback as possible. I’m also thinking of other ways I can "scale" my compassion. Writing, workshops/conferences/panels, teaching, and paying it forward, just as so many investors have for me, all help to extend my reach as I try to be as open and transparent as possible. <strong>Freedom</strong> I definitely thrive when given trust and autonomy. Thankfully, this was the case as Boris “released me into the wild of the Valley” immediately after I joined him at Version One. <em>What I’ve learned about freedom: </em> VC is great in that we have the freedom to work anywhere and at any time... but this often results in working everywhere, all the time, making communication and time management all the more critical.  As a team of two who are usually working in different cities and/or countries, Boris and I constantly review our investment processes and internal operations. We can’t get to everything, so we try to do the right things well. I’ll be the first to admit that my first six months were more reactive as I ramped up on my understanding of VC. However, I quickly learned how to prioritize. As a simple tip, I overcame my "fear of missing out" on events by only participating in those where there’s a plan to reconnect with someone I already know (and this still allows for those serendipitous encounters too!). &nbsp; Thanks to everyone for making this first year so special, and for contributing to my personal mission of helping others recognize their potential and realize their dreams. Here’s to an awesome year two! -angela :) &nbsp; &nbsp;