Mark Suster

Mark Suster is a bit of an oddity in the venture capital business — a straight-talking, no-nonsense former entrepreneur who happens to run one of the top performing VC firms in the country from L.A. So, when Suster rolled into town this week — hosting a dinner for entrepreneurs and keynoting tonight’s Seattle 2.0 Awards — I wanted to get to know him better. And here’s my conclusion: Seattle’s venture capital community could use a Mark Suster.

Suster, who joined GRP Partners in 2007 after selling his company, Koral, to, is widely respected in the entrepreneurial community for demystifying the venture capital process. I chatted with the entrepreneur-turned-VC to get his sense on everything from the Seattle startup scene to the benefits of blogging to how he’s trying to get “wantrapreneurs” off the sidelines.

What are you impressions of the Seattle tech community? “I definitely talk to a lot of young, bright entrepreneurs who are building companies and they want to be in Seattle, which is great. They have a reason to want to stay, rather than move to the Bay Area. Having the existence of what I call ‘patron’ companies like Amazon or Microsoft or even Starbucks or Costco is awesome. I was a little bit disappointed to hear that there are less neurons firing between the startups and the patron companies. But I think Seattle has so much potential.”

Any roadblocks that you see? “It faces a challenge that we see in many regions of the country, which is a lack of angel money to get companies off the ground. And a lack of enough venture capital to get companies to the next stage. So, even Seattle companies start making the trek down to Sand Hill Road, and the minute they do that they are also getting their ears bended that they should relocate to the Bay Area.”

Are you spending time in Seattle this week because you think there’s an opportunity to invest here? “Without a doubt.”

Why is that? “Our last fund was the top performing fund in the country — literally number one. And when you look at where we made money, our biggest returns two came from New York, two came from Chicago, one came from Baltimore, one came from Arizona, one is from Las Vegas, two are in Southern California and two are in Northern California. So, our investment philosophy is: We believe we can make outstanding returns investing in the major regions of the country, and we believe that Seattle has all of the right ingredients for success.”

Brad Feld

There seems to be an opportunity for a VC or a super angel in Seattle to step up and become more of the public face for the region’s tech community. You’ve taken on that role in L.A. Why did you do that, and does it lead to better deal flow and make you a better investor? “Number one, simply and honestly, I just started because I saw Brad Feld do it, and as an entrepreneur I always wanted to work with Brad because I thought what a great guy, he puts all of this information out there. And he seems very responsive and engaged. I used to do that when I was an entrepreneur, so why wouldn’t I do that now that I am a VC. So, I just kind of started. It wasn’t some master plan.”

Does it help you being so public on your blog and Twitter? “The reality is, is that it has resonated with entrepreneurs. And as a result my deal flow is kind of off the charts right now. It has also been a great vehicle to get to know people. I went to see Microsoft yesterday because one of the executives had read a blog post of mine, so we traded Twitter messages and I said: ‘Hey, let me come and see you.’ I’ve met senior people from Google and Facebook and Apple and Proctor & Gamble and digital media agencies the same way. What social media gives you is share of mind. If you have been a VC for 30 years, you have 30 years of relationships. That’s how you get access to share of mind. I’ve been in this industry four years, and so the way I get access to share of mind is being public and putting my thoughts out in public. It is also a large part of how I learn. If I am going to try to understand … mobile ad optimization or social media or analytics or conversion engines or any of these things. I kind of view it as an artist working with clay. And how can you be a good artist if you aren’t playing with clay every day.”

On why he’s trying to get entrepreneurs off the sidelines: “I think there are one hell of a lot of people who are what I call ‘wantrapreneurs’ — meaning they want to do it but they just never get started. It is something I am going to speak a little bit about (tonight). The single biggest thing to get started is exactly that. It is the start. And I think 98 percent of the funnel gets weeded out because people think they don’t have the perfect idea, so they never try. My mission is to convince more people who have the belief that they want to try, to at least try. It is definitely not for everybody. But I think the earlier in life you try, the less encumbered you are by mortgages or debt or family or other obligations. We all know now that there is a pretty safe landing if you try and don’t succeed. People value that. They respect that.”

On thinking big: “There is a lot of incrementalism in entrepreneurship today. They are reading about the latest trend in the tech press, and they are thinking: ‘What if we could launch something and get Google or Microsoft or Yahoo to buy us?’ And that kind of incrementalism doesn’t usually produce that interesting of things. So, the flippant way I said it is: Does the world really need another fucking social media check-in at your restaurant tool? I mean, I like the ones we have, and I play with them, but do we need 1o more, really? The world needs to solve and the country needs to solve its immigration problems, its education problems. We need to solve health care and health information services problems. We need to solve the debt crisis. We need to figure out how to take our big industries and make them more effective … and get that engine working better…. That’s what I think about. Who has big ideas that really want to change the way the world works? And, in all honesty, that takes 10 years…. You talk to real entrepreneurs who have made a difference and they made the difference over 10, 15, 20 years — not two.”

What do you make of the whole ‘lean startup’ concept? “There is a middle ground. I always say: Focus on base camp, not the summit…. I think most businesses, not all, need to start lean. And you need to figure out if there is product-market fit. But, when you suddenly believe in your belly that you are on to something, you better go fat…. There’s no magic formula to tell you that you’ve crossed that threshold you and need to go big. It is the fire in your belly, and the belief that you are on to something really big. But I sure as heck think most companies ought to keep their options on the table.”

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  • Jess Bachman

    I’m surprised Seattle doesn’t have a bigger startup profile given the huge business there. Maybe the ex-Amazon/Microsoft folks don’t have as much entrepreneur culture/drive as ex-Googlers et al.

  • Chris McCoy

    Mark Suster is one of the best “things” to happen to the early-stage entrepreneurship community over the last 4 years, especially as it relates to the intersection of technology, sales, and entrepreneurial psychology. Really awesome interview John!

  • daveschappell

    Great to have @msuster in Seattle for a few days — we’ll work to make it happen more often, and get @fredwilson and @albertwenger here more often as well. Plus, a few more of those super angels ;-)

    • daryn

      Nice use of the new @ replies in disqus, dave :)

      It is amazing to see how much NYC has transformed over the past few years, definitely a role model for Seattle in many ways, though we have many differences and each have our own unique opportunities to leverage.

      • David Aronchick

        OT: Kind of odd they don’t link – or they’re not linking for me anyway.

  • Anonymous

    Isn’t Geoff Entress the Seattle equivalent of Feld, Suster, Conway, McClure????

    • johnhcook

      Geoff Entress probably is the closest in the Seattle community to that role. While he certainly has put a lot of money to work in the startup community and is a huge supporter, he’s not as much of a visible/vocal/cheerleader like a Feld, McClure, Conway, Suster, etc. That’s not a bad thing, by the way. It just speaks to point above that there’s probably room for someone to emerge in the community who takes on that role.

      TechStars, through Andy Sack, Greg Gottesman, Entress and others, is trying to move in that direction. I do think it takes someone being transparent and open, blogging and Tweeting about the good, bad and ugly of the startup/VC community in a fun, informative educational way. That’s what Suster does, and it helps his brand tremendously.

      If anyone out there wants to give it a shot, we’ve got a platform here on GeekWire where guest columnists are encouraged.

      • Tony Wright

        Totally agree. Geoff is epic for Seattle, but what we really need is someone who loves tirelessly standing behind a megaphone. I keep telling Schappell that he needs to be that guy (I even offered to be his plucky sidekick, but that didn’t seem to motivate him).

        • daveschappell

          Welcome to @TeachStreet’s new CEO, @webwright :-)

      • Wesley Zhao

        I’m a young entrepreneur and it is probably because of my ignorance that I have not heard of Geoff Entress (Googling now…) but I think that the lack of ‘visibility’ can be a bad thing. The fact that I constantly hear about people like McClure, Suster, Conway etc gets me excited to go where they are. If I got as excited to be with Entress et all then I might be more willing to stay in Seattle.

        • Chris McCoy

          +1 for raising the profile of angel investors in Seattle.

          Sunlight helps seeds grow.

  • David Aronchick

    Totally agree – looking forward to see @msuster at Seattle 2.0 tonight. One of the most salient points about the post is his comment about Seattle companies going to the Valley to get money. There’s nothing fundamentally wrong with this, but he’s exactly right in that every time you fly down, you’re getting your ear bent about how you should move down for talent, bd, coverage etc etc. It’s definitely something that will constantly skim the cream off the top until we get more VCs up here.

    • Chris McCoy

      There’s plenty of talent in Seattle to build world-changing companies but Microsoft and Amazon do a pretty good job of keeping it locked up (better incentives than a startup can offer).

      @Amazon you have the great engineering talent that understand data. @Microsoft you have a little bit of everything.

      The talent exists, but a startup has to crack the risk/reward/incentive structure code to get them to jump ship.

      It’s somewhat of a chicken and egg problem, but I do believe the code can be cracked.

      • David Aronchick

        I disagree that the risk/reward/incentive structure has not been cracked. That’s exactly what a startup is – large stock, large problem, high risk. You knock it out of the park, the reward is there. You don’t, you get nothing.

        I also disagree that @amazon or @microsoft offer better incentives. They offer different incentives – at or above market pay, chance to apply address problems that are already at scale – and for a set of people that’s great. For those with the startup bug, the (relative) comfort of those companies may not be enough.

        • Chris McCoy

          One risk that needs to be cracked is the perception of failure. In Seattle, failure not looked upon so kindly (at least seems to be the general perception). Failure in places like SV is almost celebrated. This perception of risk I think keeps a lot of folks in Seattle on the sidelines (investors and talent).

          • David Aronchick

            That is a GREAT point. Though, I’ll admit, I haven’t seen this first hand, a community NEEDS to evaluate failure as (nearly always) a positive.

          • Chris McCoy

            Perception of failure is a really big deal as it relates to an entrepreneurial ecosystem. Going to an event on it tonight actually:

            I think it’s a part of that code that needs to be cracked for top money and talent to “make the leap”.

            Scaling from a startup to successful company takes hard work, luck, etc. Talent though, I think trumps the two. You only have so many iterations to get it right before the money runs out.

          • Chris McCoy

            It’s why I wish more students from the UW computer science program started startups–and were funded–rather than went to Microsoft.

            A YCombinator like incentive-system that guaranteed top young talent a certain amount of money to start a start-up rather than go to the mother ship would make a HUGE difference for startups in Seattle.

            TechStars is a really good start to this actually, now if Brad and Co. can get a fund to guarantee each startup that gets into TechStars $150k, then the game instantly changes.

            Programs like TechStars and YComb are the new business school, fyi. Business school is a terrible place to learn how to scale a startup. Absolutely brutal actually. :)

  • Marcelo Calbucci

    This is a great interview John. You brought up questions that are top of mind to make Seattle better and Mark delivered some compelling answers.

    • johnhcook

      Thanks Marcelo. Looking forward to tonight’s festivities!

  • Rishi Talwar

    This post is making me so pumped to actively engage in the Seattle tech scene on a regular basis after I graduate from UW in the next couple months! :)

  • Wesley Zhao

    Really thought it was interesting that Suster mentioned he wished there were more neurons firing between the startup community and the big patrons of Seattle (Amazon, MSFT, etc).

  • Joshua ‘Red’ Russak

    Mark Suster recently said that “Seattle should be the envy of any non-Silicon-Valley tech community in the country. […] The neurons aren’t connecting to the startups. Somebody needs to make this happen.” (TechCrunch)

    For those of you present at the Seattle2.0 Awards last night, you could feel his passion about this topic and I wasn’t the only one walking away motivated to do something about it. It’s obvious that Seattle’s tech community is strong and growing, but there’s a disconnect between the larger named organizations and the startups. They’re doing stuff – just not enough.

    That is why I’m starting Seattle Tech Meetup (@STMeetup). It all starts with creating a strong social connection among all the tech companies,
    large and small, and this new meetup will act as that foundation.Join
    the Seattle Tech Meetup movement and help make the connection.

    As per GeekWire…I fully support your movement and am excited…no…HONORED, to be a part of it!

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