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<br /> At any point of time, there seem to be enough opinions and analyses about what makes an entrepreneur or his business attractive to Venture Capital (<keyword id="47361" type="ORGANIZATION" weightage="100" keywordseo="VC">VC</keyword>) investors.<br />
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Take Mark Suster’s excellent post on <a href="https://medium.com/r/?url=https%3A%2F%2Fbothsidesofthetable.com%2Fentrepreneur-dna-c1c5d312aaaa%23.d5phzhrac">Entrepreneur DNA</a> for instance, which calls for entrepreneurs to clear a very stiff gauntlet of demanding tests, to be considered worthy of being called an entrepreneur.<br />
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And yet, there is precious little information to answer another question which has co-existed all along:<br />
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What makes certain VCs better than others?<br />
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I propose answers to this critical, and yet almost unknown facet of the mating dance between entrepreneurs and VCs.<br />
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Answers that seem to point to the possibility that the best VCs are the ones who treat their “customers” well. First things first, who are a VC’s “customers”?<br />
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In a dipstick test done by Larry Cheng on <a href="https://medium.com/r/?url=https%3A%2F%2Flarrycheng.com%2F2009%2F09%2F27%2Fwho-is-the-venture-capitalists-customer%2F">“Who is the VC’s customer?”</a>, about 85% of the respondents (Interestingly, the group of respondents included several entrepreneurs, but no VCs) said that the VC’s sole customer is the Limited Partner (A firm or an individual who invests in a VC fund).<br />
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More revealing was the fact that not a single participant in the survey said that the entrepreneur is the VC’s principal customer.<br />
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One would assume that if entrepreneurs are the VC’s customer, entrepreneurs themselves would know about it.<br />
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Might the observation that not a single entrepreneur considered themselves the VC’s principal customer be attributed to the possibility that most VCs do a terrible job at taking care of their customer (The entrepreneur)?<br />
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For the most part, the perception that there is a huge skew in the power balance between VCs and entrepreneurs (In favour of the VCs) runs very deep.<br />
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The truth though is that <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.businessinsider.in%2FVCs-are-from-Venus-Entrepreneurs-are-from-Mars%2Farticleshow%2F53449860.cms">without entrepreneurs, VCs would be out of business</a>.<br />
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More profoundly though, in the case of the best entrepreneurs, they are always free to choose another investor that takes better care of them.<br />
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<em><a href="https://medium.com/r/?url=https%3A%2F%2Fsmctoday.wordpress.com%2F">Image source</a></em><br />
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The revelation is surprising and yet hard to refute: Entrepreneurs are VC’s customers and therefore, deserve (Maybe even demand ?) excellent customer service.<br />
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Borrowing from Suster’s piece, what are the qualities that make up the DNA of a truly customer-focused VC?<br />
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This post offers a primer on some of these traits:<br />
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<strong>Approachable &amp; Responsive</strong><br />
It is perhaps every entrepreneur’s greatest pet peeve: VCs either don’t reply to emails or take too long to respond.<br />
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<em><a href="https://medium.com/r/?url=https%3A%2F%2Fwww.linkedin.com%2Fpulse%2F5-signs-you-may-email-jerk-hilary-wagner-">Image source</a></em><br />
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On the other side of the table, it needs to be appreciated that VCs get a LOT of email. For instance, Ted Serbinski estimates that he gets nearly <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.crainsdetroit.com%2Farticle%2F20130910%2FBLOG111%2F130909890%2F5-secrets-for-getting-a-vc-to-respond-to-your-email">100,000 emails a year</a>.<br />
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For most people, that translates to an email almost every minute while they are at work.<br />
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For a VC, it is a daunting task to go through every mail and provide a detailed response within a reasonable turnaround time. And yet, there is no other way for a VC to make a great first impression and (possibly) close the sale.<br />
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Much like in the case of McDonald’s &amp; Dominos’, service delivery and turnaround time are not only critical to maintaining the VC’s brand ethos, but if done wrong, can result in the loss of a customer and create negative word-of-mouth.<br />
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The time and the effort that goes into timely and well-written email responses is well worth a VC’s investment.<br />
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[BRB, clearing some more emails that have been pending for a while]<br />
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<strong>Knows the Customer</strong><br />
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Companies that have mastered the art of customer service have been able to do so because they have identified just who their customer is, and, just as importantly, who isn’t.<br />
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The same is true in the context of VC firms : They need to know their focus sectors / business areas, preferred ticket sizes, and stage at the time of entry. Entrepreneurs and ventures that remain excluded thereafter, are by definition, not the VC firm’s customers.<br />
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Wait, surely this is too trivial and obvious a matter to even be mentioned?<br />
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But if that were the case, why do so many entrepreneurs end up receiving responses such as:<br />
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“This space is not of interest to us”<br />
….after weeks of diligence ?<br />
A good VC knows how to quickly and efficiently say No when an opportunity doesn’t fit the firm’s investing interests.<br />
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Not doing so wastes a lot of time and creates unnecessary clutter in the mailbox.<br />
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<strong>Offers Relevant Feedback &amp; Adds Value</strong><br />
Being an entrepreneur is hard enough, without having to hear what is passed off as “feedback” in many VC conversations, and then keep a straight face.<br />
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One of my favourite entrepreneurs told me about how during one of his meetings with a VC, the VC “took the whole of 30 minutes to tell us that our company name will never work. Why ? Because it has more than two syllables!”<br />
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Perhaps there exists a study out there which has established a correlation between the likelihood of a startup’s success and the number of syllables in its name.<br />
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But even if that were the case, every VC owes an entrepreneur some feedback, either on how he could improve, or on why he chose to decline the investment opportunity.<br />
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It is a responsibility that continues to apply in even greater effect if the investment is consummated, especially over board meetings and other reviews (No, pseudo-intellectual one liners used in B-Schools or consulting firms do NOT count as feedback).<br />
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<em><a href="https://medium.com/r/?url=http%3A%2F%2Fwww.quickmeme.com%2Fmeme%2F36keat">Image source</a></em><br />
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(BRB, need to work a bit more on a sector to be able to give real feedback)<br />
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<strong>Becomes your greatest Cheerleader</strong><br />
The popular portrayal of the entrepreneur-VC relationship is one where the VC is, by some distance, the dominant partner in the relationship.<br />
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The reality though is that the natural dynamic of the relationship implies that the risk-taking and fearless entrepreneur takes charge, and the VC supports and nurtures the business, especially during its tough times.<br />
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In other words, the VC needs to become the Cheerleader for the business.<br />
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When I had a chat with Sachin Bhatia, Co-Founder of MakeMyTrip &amp; Co-Founder of TrulyMadly about this, his views brought home an under-appreciated truth:<br />
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‘Though the colour of money is the same, only one thing differentiates a great VC from all the others in my mind: will they support the venture and founders during tough times? Every venture will go through a bad phase, especially when it comes to raising a round of funds. As an entrepreneur I need the comfort that the VC will be good with the support needed to swim through these rough waters.”<br />
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<a href="https://medium.com/r/?url=http%3A%2F%2Fa16z.com%2F2014%2F07%2F21%2Fa-dozen-things-ive-learned-from-marc-andreessen%2F">Marc Andreessen doesn’t disagree</a>:<br />
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“You spend most of your time actually dealing with your companies who are struggling and trying to help them. Because it’s the companies that are struggling or failing that actually need the most help. The companies that are succeeding are generally doing just fine without you. The companies that are failing are really the ones that need help and support. And so a lot of what you end up doing at the job is supporting struggling entrepreneurs. It’s kind of continuously humbling. You are a trouble shooter. There’s always something going wrong. Psychologically–we talk about this with our partners–you have to be psychologically prepared for the opposite. It seems like it’s going to be a life of glamor and excitement. It’s more of a life of struggle and misery. And if you are okay with that–because it’s part of the package–then the overall deal is pretty good.”<br />
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So the next time you find yourself in an investment pitch meeting, whether as an entrepreneur or as a VC, remember that both sides are evaluating each other’s attractiveness, and there is only one chance to make a strong first impression.<br />
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<a href="https://assets.entrepreneur.com/content/3x2/1300/should-go-east-west-venture-capital.jpg"><em>Image source</em></a><br />

Why VC is a business of Customer Service

The 20 best podcasts to listen to if you want to break into and excel in venture capital, according to 11 industry experts

<ul class="summary-list"><li><strong><keyword id="6365770" type="UNKNOWN" weightage="60" keywordseo="angel-investors">Angel investors</keyword> are high-net-worth individuals who provide funding to startups, usually in exchange for shares in the company.</strong></li><li><strong>Unlike venture capitalists, angels use their own money; they also invest in much smaller, younger enterprises</strong></li><li><strong><keyword id="138263" type="PERSON" weightage="60" keywordseo="startup">Startup</keyword> founders benefit from angels' expertise as well as money, but they have to surrender some ownership and management control in return. </strong></li></ul><p>New companies need money to get off the ground, of course. But where to find it? Banks tend to shy away from infant enterprises. And despite all the ink spilled about venture capital funding, just .05% of new businesses raise money from VCs, <a href="https://www.fundable.com/infographics/startup-funding" target="_blank" rel="noopener">according to Fundable.</a></p><p>That's where angel investors (angels for short) come in. Typically wealthy individuals with cash to burn, an interest in entrepreneurship, and a healthy appetite for risk, these investors fund over 63,000 startups a year, for a total of more than $23 billion, according to the Center for Venture Research at the University of New Hampshire.</p><p>In fact, over the years, as investor interest has grown, angels have become a primary source of funding for many early-stage startups.</p><h2>What is an angel investor?</h2><p> Angel investors generally are high-net-worth individuals who provide funding to startups in exchange for convertible debt (bonds) or equity (shares) in the company. The term is actually borrowed from show business: Angels originally was an affectionate nickname for backers of Broadway shows, whose money was manna from heaven for struggling <em>artistes.</em></p><p>Angels generally fill the gap between financing from friends and family — usually, the first sources of funds, when a startup is mostly a twinkle in an entrepreneur's eye — and venture capitalists, professionals who enter the scene after a company is up and running.</p><p>Typically, angels aren't just wealthy investors, they're also accredited investors. That's defined by the SEC as people with an annual income of over $200,000 ($300,000 for joint income) for the last two years or a net worth exceeding $1 million in investable assets (excluding the primary residence), either on their own or with a spouse. As of August 2020, angels can also include individuals holding professional credentials, like a Series 7, 65, or 82 license.</p><h2>How angel investors work</h2><p>Unlike venture capitalists, angels usually aren't in the investment field full-time. Instead, they're usually drawn from the ranks of business owners, well-to-do professionals (doctors, lawyers), and other deep-pocketed individuals who can invest $50,000 or so in a promising startup. Often, they're seasoned entrepreneurs who've built successful companies and want to help the next generation with hands-on advice and the benefits of their experience, while potentially making a good return.</p><p>Typically, an angel gets an ownership stake in the company in exchange for their investment, as well as the chance to offer advice and guidance to the founders. Then five to seven years later, if all goes well, they'll expect to make a tidy profit when the startup either goes public or finds a buyer.</p><p>But the chances of any one investment reaping super big rewards are slim. So angels also are investors willing to take an educated gamble. </p><p>But they don't have to be all that rich these days. That's thanks to the <a href="https://www.sec.gov/spotlight/jobs-act.shtml" target="_blank" rel="noopener">Jumpstart Our Business Startups (JOBS) Act of 2012</a>, which allows more ordinary people to invest in startups via crowdfunding platforms. </p><p>The amount investors can invest is limited by their income and net worth. Thus, if investors' annual income or net worth is less than $107,000, they can invest either $2,200 or 5% of the lesser of their income or net worth, per year. Also, companies can raise only around $1 million in a one-year period from a crowdfunding source.</p><h2>Characteristics of angel investors</h2><p>Aside from typically being high-net-worth individuals, angel investors also share other key qualities:</p><ul><li><strong>Looking out for the team</strong>. Angels tend to veer toward startups that have been recommended to them or are in industries they know well, with the potential to grow rapidly. They also often want to see a working prototype and a clear business plan. But most important to them, is the passion, savvy, and bona fides of the founding team.</li><li><strong>Seeking safety in numbers</strong>. Unless you're super angel <a href="https://www.businessinsider.com/famous-silicon-valley-investor-ron-conways-brilliant-8-step-method-for-making-boatloads-of-money-2013-1" target="_blank" rel="noopener">Ron Conway</a>, developing a healthy pipeline of quality deals isn't easy. That's why they often don't fly solo: Increasingly angels operate in what's known as angel groups, where they can pool their capital along with other accredited investors, raising the total investment level and lowering their personal exposure. In some cases, multiple angel groups join together in syndicates, thereby broadening their reach. <br /><br />There are now more than 400 angel groups around the country. They're typically organized by geography; some biggies include New York Angels, Houston Angel Network, and Tech Coast Angels. Plus, many angel groups co-invest with other angel groups, individual angels, and even early-stage venture capitalists to make investments of $500,000 to $2 million per round.</li><li><strong>Choosing favorites</strong>. Generally speaking, angels flock to certain fields and industries. These include software, the internet, and healthcare, along with mobile and telecom, according to <a href="https://angelresourceinstitute.org/reports/HALO-2019-%20October-2020-Update.pdf" target="_blank" rel="noopener">the Halo Report</a>. Energy and utilities, electronics, and consumer products and services are also popular.</li><li><strong>Relishing risk</strong>. Angels tend to look for returns of about 25% or more over a period of five or so years via an initial public offering or an acquisition. But make no mistake: These are super-risky deals. The best estimate for investor returns, according to the Kauffman Foundation, is 2.5 times their investment, with the odds of a positive return less than 50%. So it might not be surprising to hear that only about 10% of most angels' total portfolios are in these startup investments.</li></ul><h2>Angel investors vs. venture capitalists</h2><p>At first glance, angels and venture capitalists seem similar: Both fund young companies in return for ownership. But, in many ways, they're different breeds. </p><p>As noted earlier, angels aren't full-time investment pros. Angels usually use their own money, although they typically provide funds through such vehicles as an LLC or a trust, and they tend to focus on fledgling firms — smaller operations than VCs would consider. (In fact, selling their stake to a VC firm is one of the "positive exits" angels hope for). </p><p>The average investment made by individual angels for 2019 was $73,700 and the average deal size was $374,225, according to the <a href="https://scholars.unh.edu/cgi/viewcontent.cgi?article=1032&amp;context=cvr=cvr">Center for Venture Research at the University of New Hampshire</a>.</p><p>VCs, on the other hand, pool money from outside sources, like pension funds and insurance companies, and then manage it in a fund. They also typically invest the lion's share of their money in companies that are further along in their development. </p><p>And their investments are bigger. For example, the median sum for a Series A round — the second stage of startup financing, when venture capital firms tend to get involved — is almost $16 million, <a href="https://www.fundz.net/what-is-series-a-funding-series-b-funding-and-more#intro" target="_blank" rel="noopener">according to Fundz</a>. </p><p>Plus, VCs charge hefty fees — typically around 2% in management fees and 20% of profits, usually above a certain hurdle.</p><h2>The upsides of using angel investors </h2><p>For entrepreneurs, angel funding has several benefits.</p><ul><li><strong>No debt</strong>. Since they don't have to take out a loan, entrepreneurs aren't on the hook for paying anything back. That's especially helpful should the company head south.</li><li><strong>Access to expertise</strong>. Smart entrepreneurs look for angels with a wealth of business experience they can tap. Particularly useful are investors who have founded successful companies themselves.</li><li><strong>Less paperwork.</strong> Companies that raise financing from angel investors are exempt from a variety of filings with SEC and state securities regulators.</li><li><strong>More money down the line</strong>. Once angels invest, there's a pretty good chance they'll add another cash infusion later on, in another funding round. </li></ul><p>The big downside of angel funding? Loss of control. Recipient firms have to give away anywhere from 10% to 50% of the business to the angel. That also means potentially losing some say over how the company is run, since investors will, by all rights, be entitled to play a role in business decisions. </p><h2>The financial takeaway</h2><p>Although VC firms get all the attention, it's angel investors who really form the bedrock of funding for fledgling startups. Angels, in fact, can be a godsend for cash-starved companies that aren't ready —and may never be ready — for venture capital. Plus, they offer invaluable expertise and connections to entrepreneurs who desperately need them.</p><p>Ultimately, however, enterprises in the sectors popular with angels raise the most money from these folks. That means companies in less-favored industries need to look elsewhere.</p><p>As for angels who want to get a piece of the most promising action, joining an angel group can provide the best access to deal flow. At the same time, while these high-risk investments can sometimes result in hefty profits, angels don't count on that happening. Ultimately, for many angels, it's the thrill of participating in a promising venture's early development that provides the biggest return.</p><h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing</a>:</h2><h3><a href="https://www.businessinsider.com/top-business-news-angel-investors-streaming-stars-top-bankers-2020-2" target="_blank" rel="noopener">Meet the 'super angel' investors, the power players of streaming, and the top M&amp;A bankers of 2019</a></h3><h3><a href="https://www.businessinsider.com/parlers-investors-include-a-big-angel-investor-and-a-pro-trump-pundit-2020-11" target="_blank" rel="noopener">Social media app Parler is the new darling of conservatives, backed by a successful tech angel investor and a pro-Trump pundit. It hopes to raise more money soon.</a></h3><h3><a href="https://www.businessinsider.com/solo-general-partners-raising-outside-capital-2020-1" target="_blank" rel="noopener">The 19 'super angel' investors writing lots of checks that every founder should scramble to pitch</a></h3><h3><a href="https://www.businessinsider.com/how-to-get-started-in-succeed-angel-investing" target="_blank" rel="noopener">An expert's guide to getting started in angel investing — and succeeding once you're in it</a></h3><h3><a href="https://www.businessinsider.com/angel-investor-reveals-2-prerequisites-for-billion-dollar-startups-2020-8" target="_blank" rel="noopener">An angel investor who has backed nearly 500 companies reveals the 2 criteria your business idea must meet to turn into a billion-dollar startup</a></h3>

What is an angel investor? Who they are, what they do, and how they help startups grow

<p><a href="http://www.businessinsider.com/creators"></a></p> <p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Mike Nudelman/Business Insider</span></p></div><p></p></div></div>Reid Hoffman was one of the first people to have the idea that the internet could be used to connect large numbers of like-minded people together, founding a short-lived social platform called SocialNet in 1997.</p><p>After an executive stint at online payments innovator PayPal, Hoffman turned that insight into LinkedIn, which launched in 2002 and has since become the default online venue for job hunting and making professional connections, fetching <a href="http://www.businessinsider.com/microsoft-buys-linkedin-2016-6">a price tag of $26.2 billion</a> when it was bought by Microsoft this June.</p><p>Hoffman is still the chairman of LinkedIn, and has also become one of the most prolific investors in Silicon Valley, with early bets on big winners like Facebook and Airbnb. He runs an early-stage startup fund for Greylock, a top Silicon Valley VC, serves on the boards of a number of nonprofits like <a href="https://www.dosomething.org/us/about/who-we-are">Do Something</a>, and he's recently been teaching a course at Stanford, "<a href="http://www.businessinsider.com/llinkedin-ceo-reveals-why-many-founders-struggle-to-scale-their-companies-2015-12">Blitzscaling</a>," that shows startups how to grow fast.</p><p>Hoffman is featured in our inaugural edition of the <a href="http://www.businessinsider.com/creators">BI 100: The Creators</a>, which celebrates business leaders who create many types of value in society. We interviewed him via email prior to the Microsoft-LinkedIn deal to learn more about his view of entrepreneurship, capitalism, and the future:</p><p><strong>Matt Rosoff: </strong>I've seen you quoted as saying you wanted to make a big impact on the world. Explain what that meant to you when you graduated from Stanford, and how your position evolved to encompass entrepreneurship.</p><p><strong>Reid Hoffman: </strong>As a child, I wondered often: "Why are we? What is the meaning of life?" These questions made me realize that life is what has meaning - not just individual lives, but all of our lives. Coming out of Stanford, I hoped to contribute to these questions as an academic and a public intellectual: to write essays and books about who we are and who we should be, both as individuals and a society. Then, at Oxford, I realized that being an academic conflicted with being a public intellectual: writing books on scholarship for dozens of people vs. writing books for society.  </p><p>On reflection, I realized that I could focus on software instead of books, business instead of the academy, and products informed by theories instead of just theories. With the change of focus, I could move from writing scholarship that dozens might read, to books that thousands might read, to software that millions to billions might use. Thus, I could help enable better meaning of life for many people at scale. <span><br /></span></p><p><strong>Rosoff:</strong> PayPal was outsized in its later influence in Silicon Valley - it spawned a lot of great entrepreneurs and operators. Why? What was special about it?</p><p><strong>Hoffman: </strong>Even by Silicon Valley standards, PayPal's vision was massively ambitious. We described PayPal on our company t-shirts as "the global payment operating system." We wanted to build a 21st century payments system that went beyond the credit cards, merchant terminals, and ATM infrastructure that the finance industry's established players had built. We wanted to create a service that would let people exchange money as easily as the internet was letting them exchange information. PayPal was disruptive, it was democratizing, and it had universal appeal. It gave power to millions and millions of individuals and reduced monopolist control from nations, banks, and other huge corporations. Our experience with PayPal showed us how to think big and how to keep massive ambition for impact. As the PayPal experience was very fast - about four years - we all graduated with experience, resources, ambition, and youth.  Thus, a number of us went on to create Yelp, YouTube, Yammer, and LinkedIn.  </p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span><a href="http://www.apimages.com/metadata/Index/Associated-Press-Finance-amp-Business-Califor-/21ef8baf66e5da11af9f0014c2589dfb/1/0">PAUL SAKUMA/AP</a></span></p><p class="caption">Peter Thiel and Elon Musk, two of the other top Silicon Valley entrepreneurs to emerge from PayPal.</p></div><p></p></div></div></p><p><strong>Rosoff:</strong> What did you personally learn at PayPal about impact that you've been able to carry forward?</p><p><strong>Hoffman: </strong>At PayPal, we had a window of opportunity - to scale up a new digital payments system on a global level before huge companies with far more resources and experience in the payments industry truly understood what was possible. So we learned to move boldly, decisively, and fast. At PayPal, we helped pioneer the idea that growth is the foundation for an internet company. The faster we got to scale, the stronger we created network effects, the more enduring business that we created.</p><p>Another thing few people realize is that PayPal centrally depended on the power of networks. By 2001, we had a pretty big fraud problem, where international crime rings were using stolen credit card numbers to make payments to dummy accounts, and leaving us on the hook for these charges after withdrawing the money. But because all these transactions were happening on a single networked platform, we could map how all the different accounts were interacting with each other. So we were able to develop a fraud-monitoring system that identified the various patterns that were associated with fraud, and in time we got very good at preventing fraudulent transactions. </p><p>And that was a key personal lesson to learn: a network of identities, communications, and transactions can be a platform for a number of applications. In PayPal, we had payment but also identity and anti-fraud. When you build a platform that creates all kinds of relationships and enables a huge number of interactions of one kind or another, the data that it generates ends up creating all kinds of strategic advantages. You see that in many of our post-PayPal businesses: Linkedin, Youtube, Yelp, Affirm, etc.  </p><p><strong>Rosoff:</strong> You founded a social network, SocialNet, in the 1990s, well before Facebook, MySpace, and Friendster. Then again with LinkedIn. Why were you drawn to that kind of business? What's interesting about it?</p><p><strong>Hoffman: </strong>SocialNet emerged from those questions I mentioned earlier that have always compelled me. What is a meaningful life, and what kinds of social systems enable it?</p><p>Broadly, the meaning of life comes from how we interact with each other.  The internet can reconfigure space, so that the right people are always next to each other. The internet was this new medium where anyone could be a publisher, so what did that mean? What kinds of information would people want to publish about themselves? Traditionally, publishers had often built communities of interest around specific topics. But that didn't mean all the people who were subscribing to Golf Magazine could easily find each other. But the internet made that possible.</p><p>The theory behind SocialNet was that the web wasn't just a place where traditional publishers could distribute content more efficiently, or where readers would just have more opportunities to comment on stories that professional writers had written. The web was a place where millions and millions of people would create their own media identities, share information about themselves, and look for opportunities to connect with each other in ways that could truly enhance their lives. Socialnet also started with a particular set of key relationships in human life: dating, work, social, and living (roommates).  </p><p>LinkedIn then focused on one deep aspect of life: work. Especially in its early days, a lot of people just thought of it as a place to post your resume when you were looking for a job. In reality, it was an identity platform for professionals, a place where you shared information about yourself so you could be found and find others, and thus develop connections and relationships that would enrich your professional life in all sorts of different ways. Your identity and network became the platform to amplify your professional life overall, to connect you with opportunity and success. </p><p><strong>Rosoff:</strong> Does LinkedIn have a larger mission than providing shareholder returns? What is it? And how does a company balance the need to provide profits and shareholder returns with larger missions?</p><p><strong>Hoffman: </strong>This question implies a tension between "a larger mission" and "shareholder returns." I disagree; instead, I see a synergy. First and foremost, our mission is to create economic opportunity for every member of the global workforce, by building the world's best platform for sharing professional identity, finding job opportunities, learning more about specific companies and industries, and developing new skills. And because our larger mission has led to a product that brings hundreds of millions of users serious economic value, we're able to monetize it in ways that generate strong returns for our shareholders as well. Mission reinforces shareholder return; business model reinforces mission. </p><p><strong>Rosoff: </strong>How have you taken the lessons you learned at both PayPal and LinkedIn and applied them to your investment decisions?</p><p><strong>Hoffman: </strong>Because of my experiences with PayPal and LinkedIn, I look for ideas that can solve a need for hundreds of millions of people. While achieving scale fast was also a priority for both these companies, there were also strong long-term visions informing them from the very start. At LinkedIn, for example, you couldn't directly research companies or take online classes in the early years. But the founding vision of Linkedin did include these ideas and others not yet implemented. So I look for that too. Does the founder have both the bias to action that you need to get a product to market quickly, and also a persuasive vision for where the company and the market in general will be five years or even ten years out? Does success transform people's lives and industries at scale? </p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span><a href="http://blogs.microsoft.com/firehose/2016/06/13/microsoft-to-acquire-linkedin/#sm.0001ka60rxqw9e2m102zxgrq4p23o">Microsoft</a></span></p><p class="caption">Hoffman (right) with LinkedIn CEO Jeff Weiner (left) and Microsoft CEO Satya Nadella (middle).</p></div><p></p></div></div></p><p><strong>Rosoff: </strong>One hundred years from now, will life be better for most people than it is today? How so? What could go wrong?</p><p><strong>Hoffman: </strong>We're still in the very early years of a massively transformative era, the beginning of what I call the Networked Age. The great news is that networks create compounding feedback loops that amplify the frequency, velocity, and reach of human communication and exchange. And that's the bad news too. The Arab Spring and ISIS are both products of the Networked Age.</p><p>On the plus side, I believe that networks and the flows of capital, talent, and information they enable are going to make life more prosperous and more meaningful for billions of people. On the potential downside, we should ask what kinds of strain does that put on the planet and on society? As global standards of living rise because of increased interconnectivity, we're going to need more energy, more food, more global cooperation. Can we manage it? I'm optimistic. If you look at long-term trends, we're less violent than we were 100 years ago, more educated, and perhaps surprisingly, more tolerant of diversity.</p><p>Of course, we're also going to be adding a lot of new elements into the mix, very quickly. Artificial Intelligence. Genome editing. If we think carefully about all the different pathways that are now emerging, I think we can ultimately navigate to a much better place. But the actual contours of that world are all but impossible to predict. If you think about how we went from the early web's "coffee cams" and dancing-baby animations to Facebook, Airbnb, Uber, Bitcoin, and countless other unforeseen services and technologies in less than 20 years, it seems impossible to predict specifics for 2116. Comparing the last 100 years to the next 100, however, it seems nearly certain that we will make a number of inventions and changes that will be magic and radically new.</p>     <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/amazon-credits-refund-apple-settlement-ebooks-2016-6">You may have Amazon credits waiting for you - here's how to check</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="A3ajNiNDE6kJIZNKtHtgrteDfCJbVyXt" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Reid Hoffman talks to us about the magic of PayPal, the dawn of the networked age, and the meaning of life

<p></p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div><p></p></div></div><p>In August last year, Huffington Post CEO Jimmy Maymann was promoted to oversee all of AOL's content and consumer brands.</p><p>That includes everything from TechCrunch, to AOL.com, to parent company Verizon's video streaming service Go90.</p><p>We caught upp with Maymann at the Cannes Lions <keyword id="35666" type="COMPANY" weightage="100" keywordseo="advertising">advertising</keyword> festival this week to discuss how he's settling in, what big plans he has for AOL, and his thoughts on some of the other biggest topics in media right now - from the <a href="http://www.businessinsider.com/report-judge-will-not-reduce-140-million-in-damages-in-gawker-hogan-trial-2016-5">Gawker/Hulk Hogan trial</a>, to the recent <a href="http://www.businessinsider.com/ana-report-alleges-widespread-ad-agency-kickback-schemes-2016-6">report on media agency rebates.</a></p><p><em>The interview has been lightly edited for clarity and length.</em></p><p><strong>Lara O'Reilly: </strong>You've recently moved into an elevated role, looking after a lot more than just Huffington Post now ...</p><p><strong>Jimmy Maymann:</strong> That is correct. What happened was, on the back of the Verizon acquisition last summer&#xa0;...&#xa0;Tim [Armstrong, AOL CEO] and I had a conversation with Verizon about what we wanted to do on the content side of the business. Both in terms of what we already have in hand&#xa0;...&#xa0;but also where we wanted to go.</p><p>The good thing, from my perspective, is Verizon acquired AOL not only for the advertising technology - which has been rumored that: 'oh, they were only interested in the advertising technology' - they were very excited about the content part of the business as well and how we could accelerate that even further but to do that we needed someone to take responsibility.</p><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div><p>At that point in time, all of our brands were pretty much independent brands. And they still are to an extent. But now, me, with an overview, at least I can reap the benefits and do the things that actually make sense to do on a central level and make sure we push the things to the brand edges that really need to be distinct to a HuffPost or a TechCrunch or an Engadget.&#xa0;</p><p>We have three pillars: we have HuffPost; we have Hive brands, which is all our independent brands, and we have AOL membership and home, which is the traditional legacy AOL business, so to say. So that whole structure has been made and now we are moving to the next phase because we have put ourself in a place where we are able to grow organically but also knowing that we want to get to 1 billion people. That's not going to happen organically so we are going to be more aggressive with M&amp;A and with helping us accelerate on the healthy platform we have.</p><p><strong>O'Reilly: </strong>You were talking about the distinctness of your brands. I read - and I can't remember whether this was rumor or not - that you were looking to make TechCrunch and Engadget more consumer friendly and less distinctly tech business focused ...</p><p><strong>Maymann:</strong> That is right, I actually gave an interview at some point where we talked about TechCrunch in particular, and also Engadget. What I talked about was technology is having such a profound impact on everyone's lives today. Whereas, if you think about TechCrunch and how it started: TechCrunch was really a place that was for people interested in the startup community</p><p><div></div></p><p>Obviously technology in general has become much more pop culture. If you think about the HBO series "Silicon Valley," TechCrunch was&#xa0;obviously heavily featured.</p><p>The interesting thing for us was we could see that it&#xa0;really opened up a new audience, an audience we were not talking to before. We are leaning into that in the sense that apparently there is a huge interest in this space and therefore we said: 'OK, TechCrunch still needs to be true to its core, but at the same time we can cover technology in broader terms as well, so we have something that is appealing to that audience that is also watching "Silicon Valley" on HBO.'</p><p>That obviously also opens up much more of the audience for us. It's a limited niche audience if you're just covering new startups and entrepreneurship.</p><p><strong>O'Reilly: </strong>Isn't that a good thing, though? That's the difference.</p><p><strong><div class="KonaFilter image-container display-table float_left"><div><div class="image on-image"></div><p></p></div></div>Maymann:</strong> That is our DNA but at the same time we can definitely do things off the back of that, that will open up other doors where other people can come in that really build on it, so I think that's a fair way to look at it.</p><p><strong>O'Reilly: </strong>Do you do that by acquiring talent, or utilizing the talent you already have in different ways?</p><p><strong>Maymann:</strong> What we have done is adding more people covering new verticals or having a different approach to how we cover things.</p><p>At the same time what we have also done with TechCrunch is we have moved it much more aggressively into the physical space. You obviously know the Disrupt series, we are doing the Crunchies, and all these things.</p><p>For the Super Bowl, with NFL at Stanford, we did this huge conference about the future of the stadium where we had pre-selected startups that pitched new ideas to NFL. That was obviously very, very interesting for them, for us, but also, again, it was streamed to a broad audience and it was quite interesting to see how broad these streams go right now.</p><p>&#xa0;<div></div></p><p><strong>O'Reilly: </strong>Talk to me about Facebook Live, then. Lots of publishers are experimenting with it. Is it a worthwhile investment? You might reach a lot of people, but is that comparative to TV views? Facebook is paying publishers to experiment with Live as well, one way of looking at that is: great, some income. The other way of looking at it is: ah, now we have to actually produce this stuff that we weren't doing on our own platform. How do you view&#xa0;that gamble?</p><p><strong>Maymann:</strong> &#xa0;I think for us it's not really a gamble, we have actually been bullish on live ever since I was at HuffPost. If you recall in 2012, we actually launched HuffPost Live. We did eight hours of live and are still doing huge amounts of live programming across HuffPost.</p><p>At the same time, also a couple of years ago, we launched Build, which is our in-house conference series, and&#xa0;is streaming four to six hours live every day.</p><p><div></div></p><p>We have actually been leaning into it before it became this huge thing that it is right now, which obviously makes it easier for us because we have a good perspective of what works across our properties. We have huge streams of live content that obviously we can take and put it across Facebook Live and other places so it's not like we have to go and create something from scratch. If you have to start from scratch, obviously, it's a bit of a bigger gamble because you have to find your way and find out what exactly connects with an audience.</p><p>It's not just Facebook Live. You've seen the huge rise of Snapchat video over the past year, from zero to almost 10 billion video views. So obviously, and it's a very, very different platform from Facebook, right, it's a different way of doing things&#xa0;...&#xa0;different demos, different ways of activating these people.</p><p><span></span><strong>O'Reilly: </strong>I remember at Huffington Post you were <a href="https://www.marketingweek.com/2014/03/20/huffington-post-ceo-on-native-ads-content-personalisation-and-uk-plans/">talking about this idea of personalization</a> and this idea of serving a different homepage to each user. Is that still something you believe in? Does that work across the AOL portfolio as well?</p><p><strong>Maymann:</strong> Yes. So it is something that I'm a big believer in because I can actually see that it's something that allows us to deliver better experiences to the people that come to our properties.</p><p></p><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div>On any given day across all our properties we have around 2,000 pieces of content, so that's more than enough content. The thing is just like when you go to YouTube, when you have 500 hours of content uploaded every minute ... it's information overload. How do you make sure you get the right content in front of the right people at the right time?<p>I think that's where passive personalization really becomes key because social media has been great in the sense that it has put a spotlight on content would not necessarily draw big audiences. But at the same time, when they arrive on Business Insider or something else, they might arrive out of the feed, only for that story, and then disappear so it's hit and run.</p><p>But with passive personalization what you're able to do all the time is to actually give a better experience and give you something that's relevant. When you arrive on this story, you find something that's also relevant ... Then you get them into a funnel and, a little bit like Amazon, without locking in, we&#xa0;get better and better at predicting what you hopefully like and what kind of content we should get in front of you.</p><p>From that perspective, passive personalization is getting more and more important</p><p>and is something that we have. We acquired a company called Gravity a couple of years ago that actually sits in my portfolio and works across all our content brands to optimize for this and create better-personalized experiences.&#xa0;</p><p><strong>O'Reilly: </strong>A couple of weeks ago the <a href="http://www.businessinsider.com/ana-report-alleges-widespread-ad-agency-kickback-schemes-2016-6">Association of National Advertisers released its report into [non-transparent] media agency [behavior, like not disclosing] rebates</a> and it's been a topic of conversation around Cannes. What was your reaction to the report?</p><p><strong>Maymann:</strong>&#xa0;I did see the report and I think in general the agencies we are dealing with, whether this is a big issue, it's not something that we are seeing in general.</p><p>We have a very good relationships on the agency side and the advertiser side. I think also you are at a point in time where adding value to the advertiser's business is becoming clearer and clearer so I think honestly it's something that will even itself out. I don't think it's something that should be a big worry for advertisers, at least not with what we are seeing.</p><p><strong><div class="KonaFilter image-container display-table float_left"><div><div class="image on-image"></div><p></p></div></div>O'Reilly: </strong>You mentioned M&amp;A might be an option for you this year. Where do you need to fill gaps? What are you on the hunt for?</p><p><strong>Maymann:</strong> We look at ourselves as a global company and obviously we have done things to help bolster that over the last year and a half.</p><p><a href="http://www.businessinsider.com/why-microsoft-is-exiting-the-display-advertising-business-2015-6">We took over Microsoft's properties, to monetize those and their ad sales team</a>, which gave us reach and scale in markets where we were not in. So we are now in 22 markets globally and I think that matters if we want to be in the top tier from a media/publisher perspective. We need to have scale and we need to make sure we scale in the right kind of markets. So things that can give us geographical scale is important.</p><p>But also we can go deeper in content verticals. There are a lot of areas where I think we are doing pretty well. But there are also areas where I think we can add some things that would add tremendous value to our audience so from my perspective those are the key things.</p><p>Then there might be technology plays or things that can help us just like how Gravity can help us extract value in other ways.</p><p><strong>O'Reilly: What was your take on the Gawker case [<a href="http://www.businessinsider.com/peter-thief-speaks-about-gawker-lawsuit-hulk-hogan-2016-5">in which Hulk Hogan successfully sued the media company for damages in a trial that was funded by billionaire VC Peter Thiel</a>]?</strong></p><p><strong><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div>Maymann:</strong> I think it's a highly debated case in the US. Obviously Gawker, their editorial line has been very progressive, so to say, in the way that they have gone after people. That being said, of course, I'm not sure it's a good thing when you have people with very deep pockets that are getting behind and trying to take down media organizations.</p><p>I think media organizations are here to keep people and organizations and governments accountable. When media really works that's what media does.</p><p>Then I think also sometimes they can step over the line. But if we start<span>&#xa0;</span>to take all media companies down that are holding people to account, or being critical, then as a society and as a democracy I think that's problematic. So that's my point of view on that.</p><p>&#xa0;</p><p><strong>O'Reilly:&#xa0;</strong>Are you doing anything interesting in the VR space?</p><p><strong>Maymann: &#xa0;</strong>We are. What sparked out interest in the space, five to six months ago <a href="http://variety.com/2016/digital/news/aol-ryot-virtual-reality-huffpost-1201757403/">we acquired this company called Ryot</a>&#xa0;which is an augmented reality, VR, 360-immersion video company. It's run by this amazing guy called Bryn Mooser&#xa0;who used to work at the Peace Corps for 10 to 15 years, then saw what technology could do in those areas and started to produce content ...&#xa0;and this year was nominated for an Oscar award.&#xa0;</p><p><div></div></p><p><strong>O'Reilly: </strong>How long until VR comes mainstream enough for you to be able to make money from it?</p><p><strong>Maymann:</strong>&#xa0;Obviously you can think about it the way you just asked the question: everyone needs to have the Oculus Rift or the Samsung Gear, otherwise you're not going to really have the full experience. That's correct if you really talk deep VR.</p><p>But already now we have 360 video, already now you get a very very good feel without having to buy a unit or something to be able to do it. Because if we had to wait for adoption of tens of millions of people to buy Oculus Rift then obviously this might be a play that wouldn't materialize for the next five years</p><p><div></div></p><p>Bryn&#xa0;showed how they had used $400 GoPro cameras to create these kinds of experiences and that makes it very accessible to news organizations, to individuals, to brands to go out to experiment and create these kinds of immersive experiences. That's, in the short term, very, very exciting and interesting. Then of course eventually we will run around with Oculus headsets, but that's not something that will happen overnight.</p><p>Since we acquired Ryot&#xa0;we have focused on integrating with HuffPost so we now have VR equipment in all our 16 offices around the world, we have the capability, so any given day we can go out and shoot at 2-minute thing that we feel could connect an audience better to a story. So that's the kind of commitment to it.</p><p><strong>O'Reilly:&#xa0;</strong>How much input do you get from Verizon on the content side? Data? Go90?</p><p><strong><div></div></strong></p><p><strong>Maymann:</strong> Go90 had a lot of content deals when we were acquired and we are leveraging those content deals across our owned and operated properties. So that's fantastic to get some more premium content that you can share across to your audience.</p><p>On the data side, they have 110 million subscribers, so marrying that handset data with our first-party data across our 500 million people. Then also we acquired Millennial Media and they have third-party data form 70,000 publishers, that gives you a huge data set you can use to help drive better advertising but also better content decisions.</p><p><strong>O'Reilly: </strong>How do those deals work when it comes to premium content? I imagine a lot of those were thrashed out before the acquisition?</p><p><strong>Maymann:</strong> You're right on that: some of those things, it's easy to carry over, on other things we are in the process of going back and renegotiating those things. 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