VC Corner: Dave McClure of 500 Startups (Credit Karma, MakerBot, SendGrid, SlideShare)

Dave McClure is a venture capitalist and founding partner at 500 Startups, a venture capital firm & startup incubator headquartered in Silicon Valley founded by PayPal and Google alumni, with over $250 in assets under management. Dave has been geeking out in Silicon Valley for twenty-five years as a developer, entrepreneur, startup advisor & investor, blogger, and internet marketing nerd.

Dave is a frequent speaker at technology & entrepreneurship conferences and has invested in hundreds of companies around the world including: Credit Karma (valued >$3B in 2015), Twilio (raised >$100M as of 2013), MakerBot (acq $400M Stratasys), Wildfire Interactive (acq $350M Google), Viki (acq $200M Rakuten), Mashery (acq by Intel ~$200M), SendGrid (raised >$45M as of 2014), (acq $170M Intuit), SlideShare (acq $119M LinkedIn) - among others.

From 2008 thru 2010, Dave managed the FF Angel seed investment program for Founders Fund, and ran the 2009 fbFund incubator program on behalf of Facebook, Accel Partners, & Founders Fund. From 2006 thru 2008 Dave was an advisor & consultant to several startups and helped teach the nation's first-ever class on Facebook and social networking platforms at Stanford University in 2007.

From 2005 thru 2006 Dave ran marketing for job search engine Simply Hired. From 2001 thru 2004, Dave was Director of Marketing at PayPal (acquired by eBay in 2002), where he started the PayPal Developer Network program. Prior to PayPal, Dave was a database consultant & programmer for several companies, including Microsoft and Intel. In 1994 he founded Aslan Computing, an internet & e-commerce consulting group later acquired by Servinet / Panurgy in 1998.

Before coming to Silicon Valley, Dave barely graduated from the Johns Hopkins University with a BS Engineering in Mathematical Sciences and a minor in frisbee, billiards, & foosball. His interests include microfinance and economic innovation, entrepreneurship and venture capital, ultimate frisbee, cartoons and animation, and an ever-growing collection of funny-looking hats.

Watch 500 Startups’ Dave McClure at the 2014 Startup Grind Global Conference, and read our highlights below.

VC Corner is developed in partnership with Pivotal, an agile software development firm with offices across the world.

Speaking to a the international-leaning Startup Grind Global Conference in 2014, Dave dove into what it takes to launch a global company and expand to new markets - all in his casual irreverence.

But first, Dave dives into growth hacking:

I’m happy people are jumping on the marketing bandwagon - that’s what growth hacking really is. If you’re a fan of Steve Blank, he talks about two kinds of phases: when you’re trying to find customers and figure out the business and then, when you move into trying to scale things up. That’s the growth hacking framework, too.

Find an initial set of features for an initial set of customers, and once you’ve built something in the shittiest way possible that satisfies that, as quickly as possible, you should start looking at scaling up.

But are you scaling for user growth? For revenue? For profitable revenue? All are different techniques, and some may demand raising capital.

How do I assess a global market?

There’s an equation for that! Think about it:

(# of users, by language/geo) x (average $ GDP) x (% internet penetration) = available online spend by language/geo

You’re looking for market sizes of 50 million or more if possible, with average GDP of $25,000 if possible, but even $10,000 could be interesting.

Why should or shouldn’t I go global?

You shouldn’t attack global ambitious if you’re a crappy little startup with no customers, revenue, or funding. Don’t do it if you don’t speak the language well. And don’t bother if your local market is more than 50 million users and it seems like no one else is going after it.

But do start thinking globally if you live in a small country, and there aren’t any local investors that are worth a damn. Alternatively, if these startup investors are leeches who are risk-averse or predatory, get out of there. In some cases, your necessary partners or customers will be in major cities (like Beijing, San Francisco, or London), and you’ll want to expand quickly there, too.

Where are some of the biggest opportunities right now?

We look at lot at the available market size, especially of places with uniform languages, which cuts down on localization costs. English covers about 2 billion people, and maybe another 1 billion more who speak some English, and it set to become the de-facto language of the web.

We’re also really excited about Chinese-speaking markets, Spanish-speaking markets, and Arabic-speaking markets. The question is, is there already a very large block of speakers of this language, and is it set to grow.

Take Spanish-speaking markets, like Mexico, Colombia, Argentina, which also have respectable average GDP and internet penetration rates. You’ll also notice less competition here, versus English or Chinese-speaking markets, where competition is fierce.

How do you look at the global markets? What are they, and what identifies them?

US/Can/UK/AU (+400M): Big market, not much growth but lots of spending.

Europe (500M): Not much growth, many languages, high GDP.

China & East Asia (+1B): Lots of people with growing mobile usage & GDP, but flat population growth.

LatAm (+500M): Brazil, Mexico, Argentina, Colombia, Chile - all experiencing lots of growth.

India/Pakistan/South Asia (+1.5B): Lots of people, growing mobile, lots of growth.

SE Asia (+600M): Indonesia, Vietnam, Thailand, Philippines - all experiencing strong growth.

Middle East/Arabic (+500M): growing mobile, with high future growth potential.

Africa (+700M): Growing infrastructure, lots of growth in the future.

How do you apply scale towards growing into international markets?

You have to think about the local distribution platforms - don’t take things for granted.

In search, Google is less popular in China than Baidu, than Yandex in Russia, and Yahoo-J in Japan.

Facebook and Twitter compete with Tencent SinaWeibo and vKontakte in China and Russia.

On mobile, Android is a huge platform globally, while Apple is popular only in some populations who can afford it.

Think about the way media is distributed and consumed (like YouTube being more popular in Saudy Arabia than TV or movies), and email is less popular in China than voice or chat apps.

What’s a good way to explore these local regions for the first time?

Geeks on a Plane is a ton of fun, and you’ll learn a lot.