.When I started my "career" as an entrepreneur, I knew that two things would guide me, luck and determination. While it is difficult to control the former, it tends to happen more when you actually work at it, i.e. the determined part. Reading the posting below, many budding entrepreneurs will think wow, it looks so easy, Loic "just" talked to all these famous [and rich] people in the tech world and they all decided to invest...
What he leaves out is the countless hours (over the course of many years) he has spent building his network, and his absolute determination to be at the upper levels of the "conversation." Loic recently started Seesmic, and without going to all those dreaded VC meetings, he raised a nice sized round from a group of "stars" of the tech world.
A few comments on Loic's strategy:
1. He raised what he needed, not some crazy amount.
2. Pay attention to the "pre money" valuation..high for a concept, but not high considering who Loic already was, and how much $$ he was trying to pull in. All in all, about 50% dilution to him and other staff/founders.
3. Investors are all strategic in some way. Whether they actually offer any advice worth anything, or simply are nice window stressing, all the investors add something to the mix.
4. Loic lives and breathes the world he is trying to monetize through Seesmic. He is not approaching this as an MBA "just" looking to score a buck, he lives this stuff (much more than I do, which is why I am not trying to start a Seesmic like company myself these days, as a "founder" or CEO).
5. Seesmic is a big idea, and is intended to scale that way quite quickly.
6. And back to the investors, notice that the forum for many of the conversations were conferences--Seesmic is about the IP enabled "virtual" conversation, but the in person relationship building is still crucial. Going to conferences means travel, means showing up, physically as well as virtually.
As a somewhat related note, I am writing this blog posting from an airport lounge in Prague, on my way back from Barcelona (more on that in separate posting). I was in Barcelona to attend 3GSM/Mobile World Congress. Or more accurately, to meet a lot of people who were also there. I shudder to think how much was spent on that conference by companies large and small for all kinds of impressive and not so impressive booths (some bigger than my house, I kids you not), when for most of us the important element was the human one-on-one, the conversation. Just think, a massive gathering of people to celebrate remote communications...
Anyway, back to Loic and the story of the funding of Seesmic. Enjoy. See you at the next conference!
February 14, 2008
How I started Seesmic and raised $6 million
I closed the initial funding of Seesmic in September 2007. The main investment came from Atomico's Niklas Zennstrom and Janus Friis (they invested $5.5 million on the $6 million). Talking to bloggers all the time, I have not been very good at keeping the secret as Om Malik was the first to talk about it on October 8, 2007. On November 28, Liz Gannes got almost the entire list of investors right. We have never really hidden the funding as a partial investor list was even on our company backgrounder at the last Demo conference (by the way see our DEMO video if you want to learn about Seesmic in 6 minutes). So the only real news today is the full list of investors.
We should have made it "officially" public for a while but I did not want to do it until all the paperwork was done and signed. That happened last week. Getting 14 investors on board – most of whom are individuals and not through funds - takes time.
Niklas Zennstrom and I have been friends for years and we have been wanting to launch a project together for a while. We both know that the media that has not really changed since the growth of the Internet is TV. Most of our friends do not watch TV anymore or watch it only with a laptop on their knees. TV will totally change in the future, we all know that. While Niklas and Janus are focusing on the high end video content with Joost, I have always been fascinated by the conversations.
I explained to Niklas that for me, the quality of conversations that I have enjoyed on blogs and social software since 2003 had to happen in video and that simply isn't happening yet. I said I wanted to make this happen and make it my next company and Niklas immediately said he was interested in funding it, as a real partner, as a cofounder, not just as an investor. He quickly introduced me to his long time partner Janus Friis and we immediately got on very well and started to talk how we should make it happen. Mattias Ljungman who works at Atomico with them quickly worked with me on the terms and the deal happened at an unusual pace for a funding this size. Niklas, Janus and Mattias are just the best investors to deal with. They think as entrepreneurs and behave like entrepreneurs. The trust they have given me is unique and I know exactly what it means. Niklas, Janus and Mattias spend an incredible amount of time with us, we were just a full day in London with them, see what they say about Seesmic.
What is the most important for me is how Niklas and Janus reached a massive adoption for Skype without any marketing ("in fact marketing sucks" - as Janus often says), how they turned it into a global product (Niklas and Janus are pushing us to support tens of languages on Seesmic since launch which is what we are working on) and also obviously how to scale, to name a few things.
I started thinking about launching the company. It was back in May and I of course remembered the several startups I launched before Seesmic. What I really wanted with Seesmic, is a global conversation, involving people from as many countries as possible. What my previous companies taught me is that it is very difficult to build a global company in Paris. Just because the center of the Internet is Silicon Valley and will remain, because if you are in Paris you tend to focus on France or Europe naturally. There are exceptions like the dating site Meetic who managed to become #1 in Europe and reach a size that can compete with Match.com, but it is rare (disclosure, I am a board member at Meetic). During the same dinner with Niklas, I decided with my wife Geraldine to move to San Francisco with our three kids to give Seesmic the highest possible chances of becoming a global conversation from day 1.
In two months, we changed our life, our house, the kids' school, our main language switched to english (keeping our accent, though !), got our 5-year long investors visa in the US. I changed phones and computers, leaving my ten-year old business network and friends in Europe.
In September 2007, I felt like I was graduating from business school again and starting from scratch here. Fortunately it was not totally the case. I spoke twice in a row about entrepreneurship at Google Zeitgeist Europe then Google invited me to Zeigeist in the US and that is how I met Steve Case. Conferences often help creating a network very fast and this is why I go to so many. I did not really need to raise anymore money, I could have just settled for the $5.5 million, but I really wanted to have entrepreneurs and friends help me launch Seesmic. I started calling my friends and I won't name them all here of course (please do not be offended if you helped me and I did not quote you here, I did not mean to be comprehensive). Jeff Clavier, Freddy Mini and Scott Rafer helped a lot in setting up everything even before I got my visa.
After formally announcing I was moving here, Michael Arrington and Jason Calacanis gave me my first speaker role as they invited me to become an expert judge at TechCrunch 40, which gave me great connections. I sat next to Ron Conway, introduced by Conrad Riggs. The minute I talked to Ron about Seesmic, he immediately invited me to have coffee at his San Francisco home, and he decided to invest in Seesmic after one hour. Ron introduced me in turn to so many people I had trouble to keep track of them - including Michael Parekh who gives me tons of advise, like building a reputation system in Seesmic for example.
If you asked me to name only one difference between Europe and the US it would be the positive attitude that floats constantly around here. It is the "how can I help" by default. Trust is by default. You can probably lose it fast but you have it much faster than in Europe where the attitude is more suspicious, more negative. Each time I launched something in Europe I started by getting the criticism and listening people who would explain me why I would fail. Here I have troubles counting how many people offer their help. I spent two hours with Mark Zuckerberg in Davos this year, I enjoyed of course every minute and Mark repeated three times "how can I help you". It is still so unusual for me that the only thing I had to answer was "I do not know yet, but thank you, and let me know how I can help you too". That was exactly the attitude of Mark Pincus. Mark immediately made time for me in his schedule last summer and helped me. Seesmic's office is actually located at his building at 365 Vermont St and I usually get a piece of advice when I bump into him in a corridor as well as English accent lessons.
Back to Michael Arrington. Michael was the first to see Seesmic and was also the first to become so excited about it. Michael sees hundreds of startups a week so coming from him it was a important for me of course. It was the first validation of the video conversation possibly being a big opportunity for me. Michael asked me if he could invest even though it would create issues about investing and writing at the same time, even though disclosures are always in his posts. We would for example have made it to the Crunchies but got kicked out because Michael invested and I said I would still prefer Michael's advice.
Reid Hoffman has been a long time friend, I was fortunate enough that Reid let me invest at the very first round in LinkedIn and Reid was willing to invest in my next venture without even asking what it was. Same story with my buddy and one of Europe's best entrepreneur Martin Varsavsky who told me for years he would be very offended if I did not let him invest in my next startup so here they are both friends and investors in Seesmic. I remember so well when Reid shared with me the LinkedIn slides deck he used to raise his first round, with the entire strategy. I have always been such a fan of Reid. Reid explained that there was no point in getting any revenue in LinkedIn before there is a very large community using it every day. And that is exactly how he did it. I do not think LinkedIn has charged anything before they reached like 3 to 5 million members. Now LinkedIn will generate around $80million in revenues in 2008 (disclosure, I invested in LinkedIn's first round). Seesmic will I hope be as successful but in any case follow the same launch, focusing entirely on its community for now.
Ted Wang, our lawyer, introduced by Jeff Clavier played an amazing role in closing the Series A and I recommend him to any entrepreneur. Actually you will be lucky if you can get Ted's time because he is the lawyer of so many great startups that it's more about being lucky enough to have him as lawyer than the opposite. Ted introduced me to Ariel Poler who in turn decided to invest around a coffee (and help!).
Of course Robert Scoble gave me precious advice (after he also broke the news on launching Seesmic as a rumour) on how to launch and I spent time with him, Robert also participated in the very early conversations at Seesmic. Robert gave me amazing feedback and also introduced me to countless great people. Robert liked the way we shared the idea of Seesmic on a daily basis on loic.tv and gathered feedback from bloggers the very first day. Robert pushed me to continue in this direction, Shel Israel liked the approach too.
One of the first person I called and became friends with is Dave Winer, that I had been reading since I launched my own blog in 2003 and talked to him about Seesmic, how he thought I should launch, how he saw the future of TV. Dave first asked me if he could invest and I immediately accepted of course and then decided he should not invest in company stock whatsoever with the stock market crash. And it's fine, it's not about money, it is about friendship and advice. Jeff Clavier wanted to increase his investment allocation in Seesmic in any way he could so he took Dave's allocation in a second when I told him it was there. Dave, I will still ask you what you think about what we are doing anyway !
I have watched how Steve Garfield and Jeff Pulver have been creative with videoblogging and online video in general for a while and learnt a lot from them. I was very happy when they asked if they could invest too, it was another validation that building a conversation platform for videos makes sense. Dan Gillmor's book, "We the Media" inspired me a lot in the way media is evolving and of course in creating Seesmic. Dan helps on a daily basis, he currently says we should ad Creative Commons support in Seesmic "for yesterday" and that is what we are doing.
Having friends as investors if is a very difficult exercise. It is in principle the best of course because trust is here by default but there is an additional responsibility in taking their money, especially if you fail. It is very risky and all my investors know that. I discussed it with them and want to stay friends with them whatever happens. I have personally invested in about 15 startups, many with friends and lost my money in many so I know what I am talking about and I would hate that investing in Seesmic would change anything in our friendship. In fact I could have not taken their money at all and just built Seesmic with Atomico. It is an additional responsability on my shoulders to take friends money but their advise is so valuable that I wanted to do it.
There are many other people who asked me to also invest in Seesmic. Unfortunately even though we announced the funding today only, it was actually closed for months (most of it in September 07), I just did not want to announce it before all the paperwork was done.
I thought that sharing how Seesmic got funded was important, just like sharing and being honest are the most important parts of both the Seesmic community and the product. We are building Seesmic since day 1 based on the community feedback. We have now a few thousand members of Seesmic around the World who post more than a thousand video a day in average and our active members love it. That is what matters. The people and the product. The funding is "just" the fuel.
Next steps: add the key features which are missing and launch very soon in public. You can follow daily how we build it, join Seesmic and give us your feedback. We will listen to it as much as we can.
Here is the full investor list in Seesmic, for $6 million Series A:
* Atomico (Niklas Zennstrom, Janus Friis, Mattias Ljungman and Geofrey Prentice)
* Michael Arrington - Founder, TechCrunch
* Steve Case - Co-Founder and former CEO and Chairman, AOL
* Jeff Clavier - Managing Partner, SoftTech VC
* Ron Conway - Early investor, Google
* Steve Garfield - Pioneering video blogger
* Dan Gillmor - Director, Knight Center for Digital Media Entrepreneurship
* Reid Hoffman - Founder, LinkedIn
* Michael Parekh - former Managing Director, Goldman Sachs
* Mark Pincus - Co-Founder and former Chairman and CEO, SupportSoft
* Ariel Poler - Founder and former CEO, IPRO and Topica
* Jeff Pulver - Chairman and Founder, Pulver.com
* Martin Varsavsky - Founder, FON