Capital Factory Demo Day
Today I attended the demo of Capital Factory’s first crop of incubated startups: Hourville, PetsMD, Famigo, Cubit Planning, and Sparefoot. I was surprised by the quality of attendees as all of the top Austin VCs were in attendance (pictured are Tom Ball - AV, Bill Wood - Silverton and Rudy Garza - G51) and some from the Valley as well, including Battery Ventures.
Thinktiv, a new venture accelerator, presented Mike Maples, who blew the roof off. Mike was an early investor in some companies you might have heard of: Twitter, BazaarVoice, SolarWinds and Digg to name a few. Mike was nearly brought to tears when talking about the founders he has worked with over the years that “didn’t forget him” when they made it big. It was a very genuine moment and one I will remember.
Mike said tech is a winner-take-all-business and you want to be the winner. Second place is first loser. Invest in “Thunder Lizards” which have a few common traits: 1) they have a complete team with a visionary leader, 2) they try to be awesome with no Plan B, and 3) they devour competitors and unseat incumbents. Mike said in tech, it isn’t an 80/20 rule but a 90/10 rule or greater. Since the invention of the IBM PC, 5% of tech IPOs have created 92% of the wealth.
My favorite slide was “Maples’ Law” which asserts that you will spend whatever you raise in 18 months regardless of the amount. I met the founder of a recently funded AV company who said they were going to make it last at least 20 months, which I found funny, because I didn’t sense any irony. 18 against 20 isn’t all that different. Mike knows what he’s talking about.
Thoughts about the presentations:
PetsMD: WebMD for pets. I like the business as the emotional connection to pets makes people spend lots of money on them. I didn’t love the pitch - they will need an outside CEO, and soon.
Famigo: My buddies run this company and I think they get the market and are going after it with reckless abandon (which is a good thing). One of the VC panelists said they need to figure out if they are going after consumers or developers, and I agree. They will figure it out and they will succeed.
Cubit Planning: If the presenters can’t explain what they do in plain English, I sure can’t. Their website says they automate data gathering for NEPA documents. I liked how Rudy called b.s. on their sizing of the market.
Hourville: Similar to elance, which is a portfolio company of Focus Ventures. I like the idea of a freelancer business platform. This is truly an “execution play” in every sense. They should tie in to linkedin API or ebay so they don’t have to start from a scratch from a trusted source standpoint.
Sparefoot: Audience award winner. These guys nailed it. They are an inventory aggregator (think hotels.com for storage) and have a super simple site and model. I like it a lot and apparently so did Bill Wood. They announced a Series A from Silverton which is particularly impressive because its their first consumer internet portfolio company.
Thoughts about the VC panel:
BIll Wood: Focus on 2 digit (#millions) exit and be super capital efficient. Bill says he thinks about who the acquiror is before he invests.
Tom Ball: Be capital efficient put know when to step on the gas. Culture is a sustainable competitive advantage. He was talking about his experience with BazaarVoice, which has taken great strides to maintain its identity even as it approaches 500 employees over the next year.
Rudy Garza: Quoted DKR (not surprising seeing as he’s President of Texas Exes) and says luck is what happens when preparation meets opportunity. There was a lot of discussion among the panel about this, but they generally agreed that somewhere between 50-80% is in the entrepreneur’s control.
Mike Maples: Austin has a great ability to ego ratio. Yes!
All in all, great day for the Austin startup community. Thanks Sam Decker, Josh Baer, Bryan Menell and the rest of the Capital Factory team.
