Hey Bob,
Since Nimay Mehta, Lead Edge Capital, and myself were the blessed centerpiece of two Lefsetz Letters, I’d like to return the favor. A dispatch, if you will.
First and foremost, a tremendous pleasure meeting you. While I do have a lot to learn about this life, what I do know is that you and me - we ain’t so different. Let me explain.
I remember reading a Los Angeles Times article earlier this year detailing your rise to one of the most well-read newsletters in the music business. You said, "No one has the perseverance I have. When I took people’s money for subscriptions and I told them the newsletter would come out every two weeks, it came out every two weeks, to the day."
I’m here to second that statement and add my own two cents.
Nothing, absolutely nothing, can be done without endurance. You, for example, seek stories. You’re able to find the truth in situations on a micro level and amplify them to thousands of readers with text that’s relatable, engaging, and responsive.
Tenacity is important in any industry, especially in entertainment and tech. I, too, have achieved a few things through persistence. One is my wife, who also works with me (and hasn’t killed me yet). I called her 10 times until she agreed to a date. The rest is, as they say, history.
Two, is Lead Edge Capital.
New York is for money. Los Angeles is for fame. San Francisco is for tech. I’m from Michigan. I’m for Apples and Skiing. We’re even-handed until it comes to business. Before starting Lead Edge, I was a bottom of the rung, analyst at Bessemer Venture Partners (the famous VC firm that was the early money in co's like Skype, Diapers.com, Lifelock, Pinterest, Staples, Eloqua, etc...) where I spent my days cold calling companies, trying to find needles in the haystack (i.e. co's that were kicking butt). That’s right, 2 years, 15,000 voicemails, 10,000 emails sent, 2,000 CEOs spoken with. Number 1 rule: if the CEO called you back right away the company sucked, meant the CEO had nothing better to do. Lesson Learned: Persistence is the most important thing in life.
In the past, VCs used to sit back and wait for companies to come to them for an investment. Lead Edge doesn’t use this thesis. We find companies that are doing well and ask to invest in them, because venture capital has become a commodity. We pound the phones to find opportunities and create relationships with CEOs, and from there tap into our LP network.
Pick up the phone, dial, talk, get a meeting. Rinse. Repeat. At Lead Edge, we have analysts who call and 250 individual LPs, because we prioritize our relationships.
I’ve never been told to fuck off on the phone, and I believe it’s because I remember people. Although numerous times I’ve been offered a sales job….calling a CEO every 2 days for a month straight gets you that title. The smartest people don’t win, the most persistent do. I remember names, faces, locations, family members, and I can trace someone’s story from the beginning. I thank people with handwritten notes (learned that from my wife, but funny enough listened to Pete Peterson, Founder of Blackstone speak a couple summers ago and on his top #5 list of advice is to always write hand written thank you notes after meetings). It’s so easy and something no one does anymore…everyone now just wants iphones, text messages and snapchat. But I’m old school, I still like to crank out the pen and craft a note. The best is when people email back thanking me for the thank you note. I track every intro religiously. No one is going to listen to an artist if they sit back and hope the universe brings them fame. No one is going to give a shit about an ego that doesn’t have the talent and drive to back it up. Same goes for investing. Convincing fans, convincing companies - the two are one in the same.
And that’s why we invested in Spotify. It’s breathing life back into the music business and changed the way we listen to music. It created a singles economy in what was always an album’s game. We believe in the company, and project it will have multiples closer to that of Netflix and not Pandora. In the company’s early stages, most thought the outlook was horrible. Everyone said "It’ll get crushed by Apple!" and now it’s the market leader. They’re grinding it out - it’s perseverance and innovation.
Passion gets into your blood, and I appreciate yours for the Letter. This is our sport.
Looking forward to reading more!
See you soon,
Mitchell Green
__________________________________________________
"Meet Persistent VC Mitchell Green
Lead Edge founder’s passion for tech led to deals in Alibaba, Uber, Spotify"
By Scott Martin
Oct. 20, 2017 7:30 a.m. ET
Mitchell Green has a habit of speaking in machine gun-like blasts punctuated with wild-eyed excitement.
As the 36-year-old founder of Lead Edge Capital, a New York venture-capital firm with $1 billion under management, such frenetic energy and enthusiasm have helped score deals to crow about.
"It’s the energy, right? I have never met a guy that talks so fast and seems to make sense," said Bill Grabe, a limited partner in Lead Edge funds and an advisory director for General Atlantic. "He’s made me a lot of money."
Mr. Green’s passion for tech investments has landed deals in Alibaba, Uber and Spotify. People who know him say he is a force of nature who obsesses over things until he gets what he wants.
Getting a piece of Alibaba early was a pivotal moment for Mr. Green and the future of Lead Edge Capital.
"We returned about a billion dollars," he said of the Alibaba stake.
On Wednesday, he co-led a $70 million investment in Duo Security at a $1.17 billion post-money valuation. The deal catapults the authentication and phishing security startup’s valuation to roughly four times what it was worth at its previous investment round, when it took in a $30 million Series C at a $241 million post-money valuation, according to an estimate from PitchBook Data Inc.
"This guy is an animal," said Duo Security Chief Executive Dug Song. "The most well-connected among the Fortune 500, he’s super successful but has no ego about him."
Duo’s spike in valuation spotlights a sizable multiple that comes on the tail end of one of the most overheated spells in startup investing, a period that has left a hangover of companies struggling to justify earlier valuations. Moreover, a tech unicorn in Michigan is even more of a rarity, far from Silicon Valley’s investor echo chamber.
Lead Edge’s investment in Duo Security fits squarely in line with the firm’s investment thesis: mid- to late-stage growth-equity stakes for two- to five-times returns in two to five years.
The Lead Edge team is slightly unconventional. Mr. Green’s high-octane conversations on startups - which can be unusually candid - appear to be the norm for the firm. Partners include Nimay Mehta, 27, and Brian Neider, 36, who, like Mr. Green, did cold calls earlier in their careers.
"The first concern I had was, is this scalable?" said Mr. Grabe. "Having seen the rest of the team, he seems able to clone himself."
Mr. Green, who flies about 250,000 miles a year, including on SurfAir, touts an approach that differs from Silicon Valley firms, too. He doesn’t believe in using a marketing team to boost his image, and you wont see him all over stages of tech conferences seeking deal flow. For him, two things matter: finding unusually high-growth startups and helping them get customers through dogged networking. He insists LPs get involved in networking efforts for startups if they invest in his funds. He takes no board seats.
Unlike others in the industry, Mr. Green is unabashed stressing the importance of pumping the phones with cold calls. His team of six analysts - he’s adding two more -are cut from a Wall Street mold where relentless research is paramount and 80-hour weeks aren’t uncommon. "We are the only guys running a firm who have done the cold calling before," he said.
And his rule of thumb on cold calls is simple: If they call you back right away, they are a dog. If they don’t call you back, those are the ones you want to work with. "We have shown up at people’s offices completely uninvited," he said. "Most people actually appreciate persistence."
Mr. Green doesn’t like to hear 'no' when he wants in on an investment that makes a lot of sense from his research. He’s very creative at finding founders or angel investors who might like to get liquidity, said Mr. Grabe. "You don’t know where he’s getting all this stuff from," he said. "Mitchell is like a ferret - he’s in every hole."
www.wsj.com/articles/meet-persistent-vc-mitchell-green-1508499008--
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