We're live at AOL with Ann Miura-Ko, the co-founder of Floodgate Capital.
Derek: Tell us about yourself.
Ann Miura-Ko: She's a Palo Alto native. She ended up in a Steve Blank course in grad school while she was in a PhD program. She was TAing for him. Part of her job was to "corral" the mentors for the business students. By '08 she saw cloud services were letting you get a business started on your credit card. At that point, she was invited to co-found Floodgate.
D: What makes for a great VC fund?
A: If you want to return 3x on a regular basis, you're in the top 3%. (For total investments.) There's another school of thought that you need to be invested in the top 3 companies and another in the top 10, at which point you're epic.
D: Are there vanity metrics for VC?
A: # of retweets? There are now celebrity investors and entrepreneurs, but that's not how you get into the best investments and make return for your investors. There are only 15 companies in any given year that really make return and you ask yourself how many of those are you in.
D: Which one of your investments will get there?
A: It's too early to tell, but the most successful investments need to go after the largest available market. A bottoms up examination of the land grab you're taking part in. She likes to see things that are really big. Authenticity about the entrepreneur is under-rated. As opposed to one that wants to be hero-worshiped. There's a lot of romanticism about it in the Valley. There's nothing romantic in the amount of work, so the authenticity can get you through the work.
D: What about driven entrepreneurs?
A: They don't see obstacles, they see pathways through the obstacles. It can ugly, but they have to get to the endzone. It's the drive that gets them there. Sometimes this isn't a pretty person at the end of the day, but they look for that drive.
D: What about flipping companies?
A: You should be aware with what your investors want and be aligned with it. Floodgate invites in Thunder Lizards. They're looking for Godzilla. That's not something you flip to Facebook after a week. Part of this is a risk profile founders. If you don't have a idea that screaming at you, you're better off joining a company that's really taking off.
D: Arrington says there's a class of people that aren't founders, but move from Google to Facebook, etc. What's the threshold for flipping a company?
A: Flipping is more psychology. You're out of alternatives. Then you try and sell the pieces to get the investors some money. If you're in it and you've exhausted your resources and you can't figure out how to make it work is a different mindset. There are also people who don't want to take the company public, and that's also a psychological state.
D: Why are first time founders better to invest in?
A: They're not jaded. She likes working with people who have their rose colored glasses on. It keeps her young. Staying close to young-at-heart talent does this. A second or third time entrepreneur can be like that, too.
D: I hear you're extremely competitive. Where does it come from?
A: It's innate. She remembers being mad about losing at Candylane when she was 3. She sees it in her daughter. In high school the debate coaches (students from Stanford) would buy her a slice of pizza if she made the competition cry. It's good, because she can keep tabs against herself. She's competitive with herself.
D: What's your typical day?
A: She has 3 young children. She gets up at 5am. 60-70 hour weeks are sustainable. 100 hours isn't, long term. She logs her time. (And measures how many awesome people she meets in a week.) 6:30-8am, 6pm - 9pm is off the grid and reserved for the kids. 1 hour a month, volunteering in the kids' classrooms. You can't think about "balance" in work-life balance. That requires things to be calm and that never happens, so there's never balance. Never mind women, she doesn't think men can have it all. She just tries to keep it together.
D: What about founders dealing with these issues?
A: She sees a wide range. One company in her portfolio does work 100 hour weeks. You can't blame any institution, but Pivot Labs leaving at 5:30 has had a big influence on engineering culture. She doesn't know of an actual number people she should work. She never got ahead because she was smarter, she had to work harder. If you're in a competitive environment, if the other company's engineers are working more, even if they're working less efficiently. Working hard doesn't have to be a cornerstone, but they like it.
D: You're one of the youngest general partners in the valley. What are your goals for the future?
A: It comes back to 20 years from now, she wants to see all the stuff she was part of.
D: He hears being in VC is like being in the boy's locker room. Is the discussion of ethics and morals unique to Floodgate?
A: One of the advantages at Floodgate is they started out gender-balanced. An unintended result is they don't go to Vegas after a deal, they go do karaoke. A lot of the integrity component comes from her co-founder, Mike.
Questions from the audience:
Q: Why did you choose VC or entrepreneur? And do female founders REALLY have a harder time raising money?
A: She didn't actually intend to be a VC. She was asked and then realized that VC were where the entrepreneurs had to go to. In terms of women founders, she has a bunch of them in the portfolio. They come to Floodgate, they don't look for them. They get the same test as the male founders. She can't say if it's more difficult, but there are things that women need to be coached on, but it shouldn't necessarily hold them back.
Q: How do you find the questions about big data you're not asking?
A: It's not about finding the needle in the haystack, since you don't know what either looks like. She's looking at the analytic layer. Figuring out what to do with the data.
Q: When is a good time to start seeking angel funding?
A: It's when _you_ want to seek funding, not when do they want to give it to you. You have to agree to accept the money. The amount you raise and the initial valuation effects the exit. Go as long as you cannot without investment.
Q: How do you tell if the entrepreneur isn't delusional or on crack?
A: It's a really fine line. They can be really hard negotiators. She looks for the person who's delusional of the right ways. They can't be talked out of what they really believe. They need to know when to listen to data and when to ignore it.
Q: What opportunity waves are you seeing? How do you push Lean Startup in your portfolio?
A: She teaches business model development. She says you need to move past the product and start thinking about the customer, so Lean is useful for that. She doesn't use the company development component. Building the company goes beyond the engineering cycle.
Q:How do I monetize my social site that I have no time for?
A: It's the one-founder problem. Get a co-founder.
Aaaaaaaand, that's a wrap.