Posted on November 11, 2015
Happy Veterans Day to all the selfless men and women that served and continue to serve this great country!
I am curious to know what Veterans Day means to most Americans. I grew up in Michigan and the Southeast, had several military family members, graduated from USNA and served in the Navy. So I am probably a bit biased in my thinking around veterans issues and this holiday.
To me it means service to others, selflessness and believing in something bigger and better than myself or any individual.
What does it mean to you and your family?
Feel free to email me or better yet respond in the comments section.
Here’s the official background on Veterans Day history from the VA.
I recently returned from 10 days in Israel where we met with many technology CEOs and founders of companies. I found it fascinating how many of them attributed much of their success to having served in the Israeli Military (service is mandatory for 2 years). They said it gave them two things that helped them and their companies succeed; a belief in something larger than self and the belief in a mission. It has really helped bind the Israeli culture and citizens into a tight, high performing country.
A draft or mandatory service would never fly in the US, but I have always believed that Americans should serve their country in some way. It could be through the peace corps, military, or some other type of 2-3 year program or job post high school. And if you didn’t serve in your younger years there are still numerous ways to serve others, your local community and your country. Get involved!
As a simple example, I am grateful and thankful for all the brothers in arms and volunteers that organized, hosted and funded the first Navy SEAL Foundation event last week in Los Angeles. We raised a considerable amount of money for the children of fallen SEALs. I am also thankful to Clint Eastwood, Toby Keith, Jessica Buchanan and Taya Kyle for attending and sharing their stories and life’s work.
Happy 4th of July and Independence Day! It’s a great day in America and we should all be grateful we are here in these great times and in this great country. This holiday commemorates the adoption of the Declaration of Independence. America is free. Well, not totally…still working on it and fighting to stay free.
This past week we finally gave equal rights to the gay and lesbian population in America. I think we’ll all look back over the next 10, 20, or 30 years and compare it to the abolition of slavery and women’s suffrage. My teenage kids and the younger generation have long accepted this and the rest of America is getting there. For me, I support and believe in it as a core principal. Why should the government or anyone be able to tell you who and what you should love? I prefer less government over more and having the freedom to love who and what you want is a basic American principal. Laissez faire is my fare.
Have a great Holiday Weekend with your family! Hopefully you get to enjoy a great fireworks show. I wish you an awesome day!
Wish me luck as I will be out running the Stars and Stripes Half Marathon.
I spoke at the 500 Start Ups Pre Money conference in San Francisco on Friday. The title of my presentation was the Genesis of a Unicorn (and Common Misperceptions). I received a ton of requests for the slides and an overview of my talk so I figured a short blog post would be well received. Here’s the summary.
At SVB Capital, we sit in a privileged position where we’ve invested in 95% of the most successful companies in the innovation economy. We manage $2.5B in LP interests in the venture asset class. Additionally, given Silicon Valley Bank solely focuses on the innovation economy as a sector we have tremendous insights into the top performing companies, teams and market sectors. We analyzed the data and ran regressions to understand the common drivers behind the Unicorn set, as well as, surveyed our LPs (Limited Partners) and GPs (General Partners) to understand their future investment pace and how it may affect the environment.
On the survey of our GPs, we asked two key questions. One, will there be a significant correction? Two, if so, what will drive the correction? The first question came back mixed. 49% responded ‘Yes’ and 51% responded ‘No’ (78 responses). On the second question, most believe that if there is a correction it will be driven by an exogenous macroeconomic event of some sort such as sustained low oil prices, dramatic increases in interest rates, or maybe a 911-like cyber security event.
On the survey of our LPs, we focused on their predictions for venture fund raising in 2015. In 2014, LPs invested $29.8B in venture funds. We asked them their prediction for 2015 to see if there would be fuel to fan the flames of the current investment environment and drive more Unicorns into the system. We had 296 survey respondents and only 23% responded that there would be less investment in 2015. The majority of respondents believe there will be $30-35B invested in venture funds.
Private valuations, late stage financing and plenty of capital are all helping drive companies into the Unicorn set and it appears that the underpinnings of that environment will continue.
In our analysis of the Unicorn set, we reviewed data on over 100+ high performing companies to determine the common characteristics of Unicorns at their earliest stages (when they were Seed/Series A financed).
These common characteristics tend to contradict some of the general perceptions that I believe are in the market about Unicorns. These are the points worth highlighting:
- First time Founders of Unicorns are outliers. Only 3% of Unicorns were founded by first time entrepreneurs or college drop outs. In a similar vein, 95% of high performing companies (our internal definition at SVB) were founded by repeat entrepreneurs or seasoned executives. Aaron Levie (Box) and Evan Spiegel (Snapchat) created Unicorns but it’s more likely to see seasoned executives and repeat entrepreneurs like Dave Duffield (Workday) and Parker Conrad (Zenefits) create a stable of Unicorns.
- Unicorns are founded by teams, not individuals. 80% of successful companies have 2-3 founders. In terms of education, 1 out of 3 has at least one founder with a liberal arts degree and 2 out of 3 have founders possessing solely CS or Engineering degrees.
- Not all Unicorns come from Stanford – though they are the leader in educating the most successful entrepreneurs. Founding teams come from a relatively diverse set of schools and are well educated. Our data shows that 48% of founders of high performance companies have diverse graduate degrees. Also important to note that international universities are strongly represented amongst Unicorn founders – including IIT and Tel Aviv University. Immigrants make up a huge part of the Unicorn club.
- Unicorns are located mainly on the Coasts. Even though companies can be started anywhere these days, we find most of the Unicorns flying over the middle of the country.
- Unicorns are not overnight successes. The average Unicorn is 9.8 years old. They typically reach their Unicorn status ($1B+ valuation) after the 5th investment round or the Series D.
- Unicorns have been founded in up and down cycles but the largest cohort of Unicorns was started in 2009, post the GFC (Global Financial Crisis).
- Unicorns attack large established, competitive markets and turn them upside down. They aren’t typically creating new technology to attack new markets but leveraging existing technology to transform an already existing large market.
- A very few select investors were able to spot Unicorns early.
- Unicorns showed massive user traction and network effects early in their life cycle, significantly influencing their valuation.
At SVB Capital, we are huge proponents and fans of the innovation economy and believe innovation and creativity is just getting started and will rapidly accelerate. We have never witnessed such large markets being totally transformed as they are today. Collectively, we endeavor to help entrepreneurs and executive teams to be extremely successful in their quest to better serve their customers and make the world a better place. If we can ever be helpful, please reach out any time.
Now, the billion dollar question I pose is “What Unicorn is next and who’s going to ride it?”
*Thank you to SVB Capital and specifically Lauren Chin for her research and presentation prowess.
Sometime during your day, take a few moments and think about what Memorial Day is all about. Here’s a quick link to the history in Wikipedia. Talk with your friends and family about it, and especially your kids.
A buddy of mine, Ted Alexander, posted this on FB about a common friend we had in the SEAL Teams. Steve Voigt. Ted went throught BUD/S with Steve and I later deployed to the Persian Gulf with Steve where Steve lost his life serving his country. Unfortunately, there are many stories to be told and this is just one of them.
A few additional points. Steve wasn’t even supposed to be on this deployment. One of our guys got injured and couldn’t deploy so Steve volunteered. He had sole custody of his seven year old son at the time so he made arrangements for the grandparents to take care of him. Selfless. Steve was a rock solid ass-kicker, southern boy. Nice as could be. Operator. Teammate. Dad. American.
Ted’s post is great. From Ted Alexander:
I went thru BUD/S w Steve Voigt back in 1991. He was our class Senior Enlisted and I was the Senior O, starting w/ around 120 people and finishing w/ about 35. It was a strangely miserble but very satisfying experience, made all the better w/ this guy. He was one part southern country boy and two parts ass kicking, positive attitude and hard work. He was my swim buddy throughout the program for which we had two timed swims every week for 6 months. If you failed two swims, you were out of the program. Unfortunately for he and I, we failed one early in the first phase; so the pressure was on every time we lined up at the ocean from there on out. The instructors took great satisfaction at ensuring the next two guys who wld take over leading the class were prepared to do so, should we fail a second and it be our last event. But when you had to get things done, he was the one you wanted to be with. You knew you were either gonna succeed w/ him or you’d both die tryin’. And damn he cld make me laugh, even when the ocean was rockin’ and you had to hit a time. I can’t remember the specific times we had to achieve on our two mile swims, but i think every single one of them we passed w/ less than 30 seconds to spare – getting out of that water w/ both of us completely dazed with exhaustion and that deep taste of blood across your breath when your heart’s pumpin at an all new RPM. it was miserable good times.
Steve was killed w/ 2 others in 1997 in a helicopter crash on an exercise onboard the USS Enterprise. He was a remarkable man and friend. His son was 7 at the time. I am thinking of him over this memorial day weekend, and the 5 others who graduated in my buds class who died over the few years that followed. We are blessed to have so many aspiring, noble and strong young men who have given so much for what we all share. I intend to look Steve’s son up and let him know one day what a great dad he has.
Here is part of a letter he wrote to his sister two days before he died:
“Alarm goes off. I wake up. It’s 0600 hours. Same time I woke up yesterday. And the day before. Actually since June 28, almost 120 days ago. Four months. That’s OK, though, because if anyone in the Persian Gulf tries to interfere with the policies of my sacred country, the United States of America, I’ll be there to stop them. Two months ago, it was anyone in the Mediterranean. Actually, we could stop anyone in the world.
Breakfast time. Forty-five minute wait in line. Every meal is the same. Standing in line sweating. That’s OK, though. There are people in my country who neither know nor care that their freedom is being protected at this very moment. That too is OK, because I do know. I’m doing it.
Go to work. Same routine day in and day out. It could be compared to being in jail except that the work we do is too hard and too dangerous to impose upon a criminal. It would be considered inhumane. That’s OK, though, I understand freedom and the sacrifices that have to be made for freedom to be achieved. The life we live at the cost of our military members cannot have a price put on it. If you saw our paychecks, you would understand.
Dinner time. Chicken and rice again. That’s OK. The opportunities we have in the states are limitless. There is nothing that any person cannot achieve if he/she has the heart. They don’t have those opportunities in the parts I’ve visited. They don’t even have Taco Bell.”
Here are some recent videos of his son.