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Category Archives: Venture Creation

VCs as MCs: LA Edition

(Guest post by Mahbod Moghadam)

Several months ago, I wrote an essay for Mucker Blog about the nexus between venture capitalists and rappers. I opined that the strong relation between the two “professions” is that they are not actually real jobs, they are both just what you tell your friends you’re doing when you don’t actually have a job. (“Entrepreneur” also fits into this category - I’ll write about that in my next essay!) Also, rappers and VC’s tend to be homies, as evidenced by Chamillionaire’s recent appointment as “Entrepreneur-in-Residence” of Upfront Ventures.

The rapper/VC nexus, by this logic, stands to be especially strong in Los Angeles. This is because, in Los Angeles, nobody has a job. Everybody just drives back-and-forth from Equinox and somehow gets paid to do it.

And so, without further ado, I’ve compiled an LA EDITION of my VC/rapper list:

Paige Craig is….. 2PAC: Paige Craig is LITERALLY 2pac. This is the most obvious VC/rapper connection of them all. Paige Craig is not only the most baller investor of all time, he is also committed to the thug life. I don’t know if he has “Thug Life” tattooed on his chest, but I wouldn’t be surprised. If he doesn’t, he should definitely get it. Paige Craig also has a soft, sensitive side akin to 2Pac when he would pen heartfelt tracks like “Dear Mama”. Just like 2Pac is my favorite rapper, Paige is my favorite VC. I’m hoping that someday soon, Arena Ventures will be (to quote 2pac) “located worldwide like the art of graffiti”.

Will Hsu is…. DRAKE: Mucker’s very own Will Hsu is a sensitive, lovable guy. While he also has a hidden thug side, it is not so readily apparent. While I wouldn’t say Will is “soft”, Drake is not in fact “soft” either - this is just a commonplace misconception of Reddit trolls and their ilk. Also, let us not lose sight of the fact: Drake is the hottest rapper alive right now. Mucker Lab is the VC version of “So Far Gone” - it is finna blow up.

Shamin Rostami is….. NICKI MINAJ: Shamin, like Nicki, is the “Girl Boss” of LA VC. Even though she is young, she actually runs this shit. TYLT Ventures is her “Young Money” (also Gerard Casale is Birdman - brrrrrrr!)

Mark Suster is…… A$AP ROCKY. A$AP is adept at channelling other rappers - he often raps in the styles of other rappers, and will often pay homage to rappers from the 90’s such as Master P. Similarly, Mark Suster is skilled at imitating some of the finest aspects of Ben Horowitz, such as adopting the “entrepreneur-turned-VC” moniker and bringing on Chamillionaire as Upfront Ventures’ Entrepreneur-in-Residence.

Jason Calacanis is…. RICK ROSS (rrrrrrrugh!): Jason is the “Falstaff of tech” - he is a bon vivant through and through. Much like Rick Ross, his interests are not limited to tech - I could totally see him opening up a chicken wing chain like Rozay’s famed WingStop. Jason is the kind of investor who will share a 20-piece chicken wings with you and tell you exactly what he thinks of your product - he pulls no punches! Brutal, refreshing honesty. Rrrrrrugh!

More Funding Won’t Magically Fix Your Startup

More Funding

by Erik Rannala

Some entrepreneurs think that (more) money will solve all their company’s problems. It won’t.

Like a teenager with a million dollar allowance and an identity crisis, a startup with too much capital and no product-market fit will become capable of making larger mistakes.

Biggie Smalls said it best: “Mo Money, Mo Problems.”

As an investor, I root for startups. It pains me to see great teams and ideas collapse under the pressure that sometimes follows fundraising. If you’ve raised money and you’re not sure what comes next, that’s fine – I don’t always know either. However, I do know four things you absolutely should not do:

Continue at TechCrunch...

Interview with Everipedia’s Tedde Forselius

Interview with my Everipedia Co-founder Theodor Forselius (AKA “Tedde”) by Mahbod Moghadam

One of the main reasons I got involved with Everipedia is that I really like the ethnicities of my cofounders. Sam is a Persian Prince - and you know I am deeply proud of our shared Iran roots - and Theodor is Swedish. Sweden is pretty much my favorite non-Iran country. Swedish House Mafia, Spotify, Swedish fish… the list of things I love about this country (which, sadly, I’ve never visited) goes on and on…

 As I got to know Tedde more deeply, I discovered that he is very weird/cool. He started his first company at age 18, and his social gaming network, Hello, is a pretty big deal! (The teenage players pretty much worship Tedde - there is a secret level in the game where you go into a trophy room and there is a giant virtual bust of Tedde’s head!)

Tedde’s hero in life is Elon Musk and - now that Tedde is living at UCLA, right by Elon’s native Bel Air, it is only a matter of time before the two of them kick it!

Below is a short interview I conducted with Tedde, to get deeper into the mind of this young Swedish genius:

Why are you so in love with Los Angeles?

The only thing better than Silicon Valley is palm trees and beaches, so Silicon Beach must be the perfect place for a techie like me coming from the cold and harsh winters of Sweden.

Why are Swedish startups blowing up so hard? Is it something in the water?

I personally think of Stockholm as the Silicon Valley of Europe, and I think one of the main reasons why startups are thriving there right now is because of the cultural impact government investments into technology had in the 90's. They made sure that high-speed internet was widespread early on and gave tax deductions to citizens wanting to buy computers. This meant there was a whole generation growing up that was technologically literate from a very early age, which ended up fueling technological innovation in the 2010's.

Are there any cool, Mucker/YCesque accelerators in Sweden?

I've heard of a few such as the Sting Accelerator, but overall I think Stockholm has some catching up to do when it comes to helping seed & pre-seed stage companies if they want to compete with accelerators in other european cities.

What made you abandon your gaming empire to do Everipedia full-time? Do you ACTUALLY think Everipedia is that great?

Luckily I didn't have to abandon it! I was fortunate enough to have a great team of people who stepped in to help me manage it after Everipedia started consuming more and more of my time. Everipedia isn't just great because the idea behind it is brilliant, but also because it has the potential to get massive exposure around the world, I think that's what makes it so cool, it's not just some niche app for a niche market but instead has every single person with internet access in the world as a potential user.

What's it like working with the crazy Rap Genius guy? Is he weird?

I imagine it would resemble how it must have been working with Steve Jobs, if Steve Jobs was Persian.

What are the rules of Everipedia HQ? Is it a "party house"?

Partying is highly encouraged - but sugar, gluten and dairy are not allowed anywhere near the premises.

What are the top 3 things you miss most about Sweden?

The lack of traffic, free healthcare & my chihuahua.

What do you think are the top 3 coolest pages on Everipedia right now?

Mark Zuckerberg (he is another of my heroes)

Mahbod Moghadam

Taylor Swift

I’ve heard people say Mashable founder Pete Cashmore should move to male modeling from being a tech blogger, and now, some of your fans are saying the same. Do you think you might someday make the move?

Most likely, I can't keep declining modelling contract offers forever. (Maybe after Everipedia IPO would be the best time to do it…)

Brother From Another Mother: VCs and Rappers


Guest post by Mahbod Moghadam

Rappers want to be venture capitalists, venture capitalists want to be rappers: it is a tale as old as time. It totally makes sense, cause both rapper and VC are not actual professions - they are both kinda what you tell friends and family members you’re doing when you’re unemployed. Also, in both fields, appearance is everything. The rapper needs to have the tricked out Mercedes-Benz and the venture capitalist needs the Tesla with the “Carbon Footprint” limited edition 22-inch rims..

As former founder of Rap Genius and current founder of Mucker-based Everipedia (aka “Thug Wikipedia”) - I have dealt with a lot of capitalists as well as rappers. Sometimes, I can’t even tell them apart. In the case of Rap Genius board member / investor Ben Horowitz (aka “Emcee Tic Toc”) - he is in fact both… which got confusing, especially when he would wear the big gold chains to board meetings and stuff…

Below, I have listed some of my favorite rappers along with their VC “spirit animals” - please feel free to send me more suggestions to add to the list! (Tweet at me: @mahbodmoghadam)

John Doerr is…….. GUCCI MANE

John Doerr has been keeping a low profile recently, probably because Gucci Mane is in prison. But both of them will be making a strong comeback in 2016! Think about all of the young wannabe “struggle rappers / struggle venture capitalists” whom these men have inspired! Furthermore, John is from Saint Louis (ask his tattooist..) and attended Rice University - so he is reppin the d-d-dirty dirty South.

Paul Graham is……. DR DRE

PG is the composer of the beats for the entire West Coast - it is not about his own projects, it is about the culture he has inspired. Also he likes to floss and drives a cherry red Porsche - fuel efficiency be damned! He is very rich, just like Dr Dre after selling Beats by Dre to Apple. Rumor has it Jessica Livingston ghostwrites his verses! (You didn’t hear it from me tho..)

Jason Calacanis is…… RICK ROSS (rrrrrugh!)

Jason is the “Falstaff of tech” - he is a bon vivant through and through. Much like Rick Ross, his interests are not limited to tech - I could totally see him opening up a chicken wing chain like Rozay’s famed WingStop. Jason is the kind of investor who will share a 20-piece chicken wings with you and tell you exactly what he thinks of your product - he pulls no punches! Brutal, refreshing honesty. Rrrrugh!

Bill Gurley is……. AESOP ROCK

I was going to put GZA for Bill - the point I’m trying to make is, this dude is a thinking man venture capitalist - very rare in the VC world. Bill is the Marcus Aurelius of VC, the VC-philosopher.. much like Aesop Rock has the largest vocabulary in all of rap, Bill has the largest vocabulary of any venture capitalist (eventually Rap Genius will prove this…)

Marc Andreessen is…… 2PAC

I’m not just saying this cause they are both bald ok? Marc Andreessen is the definition of “thug life”. He is married to “The Princess of Silicon Valley” aka Laura Arrillaga-Andreessen - similar to how 2Pac was engaged to Quincy Jones’ daughter when he was shot to death. Andreessen’s passion for bitcoin is reminiscent of 2Pac’s “M.O.B.” philosophy. (ps Balaji Srinivasan is his Hussein Fatal in this metaphor..)

Venture Capital Is Dead. Long Live Venture Capital.


(Guest post by my partner, Erik Rannala)

There have been rumblings recently that the traditional VC model could be in danger of extinction, threatened by more contemporary investment sources such as crowdfunding and super angels.

While it’s true that the early-stage landscape is changing, VCs are hardly on the demise, nor are professional VCs losing ground to crowdfunding and angels. In fact, the amount of VC funding increased last year to $33.1 billion in the U.S. Roughly one-third of those dollars were aimed at seed and early-stage funding with $10.7 billion invested — up 37 percent over 2008 investment, when the industry was at its peak.

Rather than looking at the funding landscape as a zero-sum game, with one model rising up at the expense of another, it’s best viewed more as a continuum, with investors across the spectrum matching up with companies at the right stage of development or maturity. The truth is that there is plenty of opportunity for a wide range of investors and entrepreneurs, and a healthy economy depends on diversity — in both the types of businesses and the capital they can access.

If the numbers alone aren’t enough to convince skeptics that VC isn’t dead, here are four more reasons:

Continue @ Recode

What Entrepreneurs Can Learn From the 5 Craziest Investor Meetings


As a startup founder, a huge amount is staked on your ability to fundraise. Investment means you have something to live on while you turn your idea into a reality. It allows you to hire and spend money on the things you need to get your startup off the ground. Funding means survival.

As an investor, I appreciate these high stakes and the passion of entrepreneurs who just want someone to believe in their vision. However, sometimes that can go a little too far. I’ve had a number of crazy investor meetings over the course of my career, and each of these extreme cases has yielded some valuable insights of what to do, and more importantly, what not to do, when raising venture capital.

Continue at Entrepreneur Magazine

Tale of Two Valleys: LA and the Bay Area from an Investor’s Perspective

Two Valleys

Almost 30 years ago, my father decided to uproot the entire family from Taiwan to the United States so that his  academically "inconsistent" son could have an education tolerant and perhaps even encouraging of his idiosyncrasies. As an entrepreneur himself, founding and operating printed circuit board factories in Taiwan, my father was debating between two places to immigrate to and build his next new venture: Los Angeles ("The Valley" . . .aka San Fernando Valley) and Santa Clara ("Silicon Valley").  At the time, LA and Santa Clara were both the epicenter of the technology industry due to the significant overlap between the aerospace/military industry (Los Angeles) and the computing business (Silicon Valley). In fact, in the 70’s and 80’s, the distinction was almost entirely semantic, as the military and aerospace industry invested ungodly amounts of capital to create technology breakthroughs that eventually saw wide commercial adoption in the personal computing industry.

Over time, though, military spending wound down and many large aerospace and military companies left Southern California. Los Angeles, at least metaphorically, became more of a media/entertainment town. At the same time, the consumerization of the technology business made Silicon Valley the de facto capital of all things tech.

My father eventually decided on Santa Clara (Saratoga, more specifically), and so I grew up in the shadows of the orchards of Cupertino and the nondescript concrete startup boxes of Santa Clara. After stints as a technology investment banker, a dot-com entrepreneur, and a product manager in Silicon Valley, I moved to Los Angeles in 2006.  For the last couple of years, I’ve been investing in startups as a partner at Mucker, while spending a lot of time in the Valley working with potential co-investors and partners.  My partner Erik Rannala has had a similar experience, having worked as a VC at Harrison Metal before moving down to LA to co-found our seed stage venture firm. Given our backgrounds, we often get asked about what makes the tech scene in Los Angeles different from that in the Valley. These are some of the major differences we have seen over the past few years:

“Quality” vs. “Sophistication”

Many arguments are fought about the “quality” of entrepreneurs and companies in Los Angeles. From my experience, it’s not necessarily about “quality,” but rather about “sophistication.” It’s probably not too controversial to say that the median level of sophistication of early stage entrepreneurs in Los Angeles is lower than that of Bay Area. If you took a random sample of 100 entrepreneurs here in LA, over 50% might not be able to tell you how to technically calculate 90-day cohort retention or how to build a cash flow statement. That number in the Valley might be closer to 10%.

We see a lot of great entrepreneurs with incredible market vision, loyal customers, and flawless execution who simply do not yet speak the same language as the typical Valley entrepreneur and executive.  This lack of “sophistication” does not always correlate with the lack of success. Encyclopedic knowledge of term sheets and startup buzzwords can be quickly learned, trained, and packaged. Investors in LA simply have learned to look for the underlying signals of “quality” rather than the more superficial symptoms of “quality.”

“Stamps of Approval” and “Opportunity”

Go to any of the LinkedIn profiles of entrepreneurs in Bay Area and you see names like Google, eBay, Apple, Yahoo, PayPal, and Facebook littered throughout. It’s easy (and perhaps intellectually lazy) to use those big brand names as a proxy for the quality and potential of these entrepreneurs.

In LA, we don’t see as many entrepreneurs with these types of backgrounds as we do in companies up north. However, it’s a mistake to believe that the lack of these stamps of approval is a sign of anything but the lack of opportunity. We don’t have as many of these signature companies in LA, and so our entrepreneurs often do not have the opportunity to cut their teeth at these more traditional proving grounds. While such an experience would be nice, it certainly is not a pre-requisite. In fact, employees of these huge platform companies often do not know how to growth-hack their way from a standing start; they may be too accustomed to the massive traffic and structural advantages of their previous employers. As a result, we’ve learned to be just as impressed by an entrepreneur who previously launched a chain of Taco stands as we are by an entrepreneur who was formerly the original product manager of Google Maps.

“Ability” vs. “Knowledge”

In the same vein, because not as many entrepreneurs in Los Angeles worked at companies like Google or Facebook, a lot of them have not really gotten the training they need to properly communicate requirements, run a scrum, or conduct A/B testing. Certainly it is a negative to not have acquired the basic skills of product management. However, given some time, coaching, and practice, great entrepreneurs have the innate ability to quickly gain the muscle memory to not just execute and repeat, but also to build and improve.

As VCs, we simply have to understand the risk / reward of these type of investments, and to actually be excited that we can be operationally involved in adding value ourselves.  Having spent the bulk of our careers as entrepreneurs, we relish the opportunity to roll up our sleeves and help.


Dealflow in Southern California is much more organic and less efficient.  In Silicon Valley, given how tightly knit the ecosystem has become, and how well-networked entrepreneurs have learned to be, there is almost no such thing as “proprietary” deal flow. The top tier funds see almost all of the best deals.

The best entrepreneurs have been coached to run a tight process, to shop their term sheets to a myriad of VCs, all of whom have great reputations and large networks. In Los Angeles, that network has yet to become as efficient, and the reputational transparency of investors has yet to be cemented. (Not to mention that there are only a handful of active, institutional venture funds based in Los Angeles.)

Furthermore, entrepreneurs don’t necessary build their businesses to be venture-funded. Oftentimes they see a market need and simply want to serve those customers. By the time the venture financing topic is broached, they already have significant traction for their business. In that context, these entrepreneurs have come to look for specific VCs that provide the exact value-add they need.  I regularly come across companies who happen to have the #1 paid app in the App Store fly under the radar for years before raising venture capital.

“Diversity” and “Domain Experience”

While Hollywood dominates in terms of perception and mindshare, in reality, Los Angeles is a middle-market town with significantly more diversity than the Bay Area from an industry perspective. Categories like retail, automotive, logistics, distribution, manufacturing, and many others all play a significant role in employment AND entrepreneurship in Southern California. As technology continues to encroach and disrupt traditional industries, we are seeing an increasingly diverse set of entrepreneurs (especially in B2B categories) tackling industries that very few entrepreneurs in the Bay Area ever think about, given their lack of exposure. While in Silicon Valley entrepreneurs often ideate through a superficial process of derivative “X for Y” concepts (e.g. “Uber for pets”), Los Angeles entrepreneurs often come from a specific industry with deep domain expertise, offering to use technology to solve a huge need with which they have deep, first-hand experience.  It doesn’t take a genius to know which team, with proper resources and guidance, will have a higher likelihood of success.

“Cashflow” vs. “Big Idea”

When I first arrived in LA in 2006, the most common complaint about Los Angeles companies was that they are often more focused on generating cashflow than building long term strategic defensibility and achieving an outsized outcome as a result (arbitrage and domaining are two business models that originated and thrived in LA). Much of this is due to the lack of venture capital – seed-stage venture capital, in particular – to get companies off the ground here in Los Angeles. However, the ambitions of this current generation of Los Angeles entrepreneurs are no longer stunted relative to those in Silicon Valley.

LA is the home of Snapchat, Tinder, and Whisper – social mobile apps swinging for the fences. Likewise for Oculus, pioneering next-generation technologies like virtual reality.  These are businesses aiming for scale and impact, not merely monetization. Los Angeles is also a city of media and brands – industries with which scale and reach are even more critical than even on the Internet.  As these industries continue to cross (or collide?), we will increasingly see the outsized outcomes that VCs require, and along with them, the exponential increase in the ambitions of our entrepreneurs.

The Term Sheet Mating Dance

Term Sheet

There is no word more sacred and yet over-used than “term sheet” in the entrepreneurial circle. The pursuit of the mythical VC term sheet has blinded entrepreneurs from the real goal of building a business: revenue, customers, users, engagement and retention. Securing a term sheet is about more than money — more than survival. It’s validation. It’s the exact moment when the entrepreneur, the beggar, turns into the auctioneer of precious equity. It is, in the immortal words of Mark Zuckerberg, when a struggling entrepreneur gets to turn the table and declare to the world, “I’m the CEO, bitch.”

It turns out there is a big difference between the technical “terms” of a term sheet and the complicated dance of actually receiving/procuring/pillaring a term sheet. From what I’ve learned over the years as an entrepreneur and now as a VC, the mating dance of term sheets can be put into a few genotypes.

Continue at Techcrunch . . .

The Seed Valley of Death: Caught Between $19B and Series A Crunch

Even before Sequoia Capital made $3.5 billion on a $60 million investment in WhatsApp, the seed- and early-stage funding landscape had already changed significantly. Most major VC firms have significantly scaled back their seed-stage investment programs.

Furthermore, many Series A funds will openly admit that the traction needed to raise a Series A today as opposed to 18 months ago is comparable to Series B.

At the same time, seed funds are raising more and more money for their new funds. Five years ago, the average seed fund was about $35 million; today, that number is closer to $100 million. The need to deploy more capital and the reality that traditional Series A firms have moved upmarket from the traction perspective for Series B-like companies has translated into seed funds happily deploying capital in companies that no longer look like “seedlings.”

Continue at Re/code . ..

From Hubris to Confidence

What does Mark Zuckerberg, Jack Dorsey, Larry Page, Marc Andreessen, Elon Musk, and Peter Thiel have in common with me? We’ve all guest lectured at the Stanford Entrepreneurial Thought Leaders Seminar.  Here is me doing my best to not embarrass my fellow esteemed lecturers. . .

Stanford William Hsu

Catching Up on Bylines: Lies & Hacks

Making fun of myself and the bullshit I spew on a daily basis . . .

It’s almost been two years since I co-founded LA-based accelerator MuckerLab and since then, I’ve gotten pretty good at lying.

Not the “pants on fire” kinds of lies, but more like “Pretty Little Liars” ones. These are the types of lies that VCs and accelerators dole out to entrepreneurs because they are somewhat true, mostly innocuous, often keep people from crying, but are most definitely misinterpreted by entrepreneurs.

read more at Business Insider

A refresh of an old post from my now-defunct personal blog from 2008 (ya 2008!) . . . on how to build liquidity in marketplaces

Many investors love “disruptive” businesses. This is in part because these businesses are unencumbered by legacy constraints that had previously been hardwired into the companies and industries these startups are trying to disrupt. One such business model is the “online marketplace,” an entirely new business category not possible (at scale) before the Internet.

During the first dot com era, marketplaces were all the rage – with eBay leading the charge. By the end, 99 percent of the B2B marketplaces had cratered and only B2C eBay was left standing and thriving.

The prevailing consensus at the time was that B2B marketplaces were too hard (e.g. it’s really a software business, not liquidity driven) and that B2C marketplaces could not be built under the giant momentum of eBay’s “network effect.” Investment stopped, and entrepreneurs focused on other categories.

read more at The Next Web