A VC - Latest Comments in Twitter Fills The Tank

Re: Twitter Fills The Tank

Chris — Sun, 15 Feb 2009 14:58:29 -0000

Thanks for your response Fred!

Re: Twitter Fills The Tank

fredwilson — Sun, 15 Feb 2009 09:26:13 -0000

Your issue is that there aren't enough VC firms that have a mandate from
their LPs to invest in materials science

Our firm, for example, has a mandate from our investors to invest in web
services only

As for twitter needing or not needing $35mm, you can think what you want
from looking at it from the outside.

I am looking at it from the inside and I think buying an insurance policy on
the sustainability of the business for a long time to come was a very wise
move

We could have turned away the money for sure, nobody forced us to take it

We talked long and hard about it and we made what I believe is the right
call for all the stakeholders in the business, including you because you are
a user of it

Re: Twitter Fills The Tank

Chris — Sun, 15 Feb 2009 08:05:42 -0000

I couldn't get the Facebook connect to work, but my first message is above as Chris Frost

Re: Twitter Fills The Tank

Chris — Sun, 15 Feb 2009 08:03:37 -0000

Fred, in response to your comment above back to my point about time and keping money in the bank.

I think you know as well as everyone there will be money coming in from Twitter in the next 6 months.

I find it hard not to think that this is VC vulture culture, combined with irrational exhuberance. I really don''t believe for one minute Twitter needs the money.

I think it is great you got in early and i hope you make an exit. But from the outside it looks like other VCs are simply thinking i want a piece of the pie.

Twitter must be running high and being offered serious money takes courage to turn down. I know this because i turned down Goldman Sachs finance in the 1998 boom.

Reading this Twitter scenario makes me ask the question, is this really what VC is for or is this another case of vulture culture?

To give you an example, one of the companies i am involved in http://www.copalife.com is a good example of why you would use investment. This is a billion dolalr opportunity, with barriers to entry and a huge amrket?

Copalife is basically a technology company based on incorporating copper alloys into textiles, which subsequently offer anti-bacterial, anti-viral, anti-mite, anti-odour and anti-fungal properties.

This technology can actually be used to stop and start the healing process. 40% improvement in wound healing vs a standard bandage. Needless to say the US military are sniffing about etc. the technology stops the spread of AIDS and kills MRSA, avian bird flu etc...

But we have to go through the regulatory approval to sell this as a medical device, this costs many millions.

Is this not want you really should use VC money for? - Note we are not actively seeking finance, since we are cash positive and selling, were in NY Times last week etc..I am merely making the comparison between Twitter and a company that would use finance constructively.

I guess it also worth saying i love Twitter and use it extensively http://www.twitter.com/fros...

Re: Twitter Fills The Tank

SamJacobs — Sat, 14 Feb 2009 21:59:10 -0000

I assumed. I was being a bit glib. Regardless, it's enough to buy more
than a couple of years to figure things out. Still impressive. Congrats.

Re: Twitter Fills The Tank

Aruni S. Gunasegaram — Sat, 14 Feb 2009 21:54:13 -0000

Congratulations! Benchmark has a great reputation. It is true that the best time to raise money is when you don't need it. I can't wait to see what you all do with the money! Must be pretty exciting opportunities ahead to raise $35 million!

Re: Twitter Fills The Tank

fredwilson — Sat, 14 Feb 2009 18:40:44 -0000

they burn more than $1mm/year Sam

that was a hypothetical number.

i didn't want to disclose confidential info

Re: Twitter Fills The Tank

fredwilson — Sat, 14 Feb 2009 18:39:50 -0000

i didn't say twitter burns $1mm, that was a hypothetical number. a ten year time frame is a tad long. venture funds are ten year funds. so we look for exits in around seven years. but it's most definitely a long holding period asset class

Re: Twitter Fills The Tank

fredwilson — Sat, 14 Feb 2009 18:26:08 -0000

it's very typical to add to the syndicate on deals that are working well, scaling, and allow room for new investors

the board is the way that various VCs come together to influence the company.

we work hard to make sure we have board members we are compatible with

Re: Twitter Fills The Tank

Todd Allen — Sat, 14 Feb 2009 16:23:37 -0000

I'd love to be wrong here, but I've never heard of a VC investing on a 10 year time frame, DEFINITELY not on a 35 year time frame. So whatever their burn is, there must be some expectation on it increasing, likely to around $7mm/year?

Re: Twitter Fills The Tank

S.t — Sat, 14 Feb 2009 13:36:28 -0000

Agreed --

Wasn't it once possible to update your Twitter status via Google Talk by click your contact " twitter@twitter.com "?

What the heck happened to that?

Re: Twitter Fills The Tank

SamJacobs — Sat, 14 Feb 2009 13:30:50 -0000

they now have 35 years to figure out a business model. should be enough time to build a good contextual ad service and integrate it with geo-services/local/micro-community features. an impressive raise in this environment. congrats, fred.

Re: Twitter Fills The Tank

rikin — Sat, 14 Feb 2009 12:09:00 -0000

Your saying that "the best time to raise money is when you don't need it" can apply on so many different scales, right down to the individual. Great news for twitter too!

Re: Twitter Fills The Tank

Steve Kane — Sat, 14 Feb 2009 09:46:48 -0000

so, how many years is twitter braced for? must be a decade at least?

;)

Re: Twitter Fills The Tank

Raja — Sat, 14 Feb 2009 09:40:53 -0000

I hope this means they do not sell themselves until they realize their immense potential. If facebook or google buys them, then they will stagnate.

Re: Twitter Fills The Tank

fredwilson — Sat, 14 Feb 2009 08:20:32 -0000

there's so much to be done with geo services. outside.in is doing stuff with twitter. but i also think twitter should do stuff with latitude.

Re: Twitter Fills The Tank

fredwilson — Sat, 14 Feb 2009 08:16:10 -0000

time.

even a small burn, say $1mm dollars per year, over five years is $5mm

this is an insurance policy for everyone; the users, the employees, the people who build apps on the API, etc, that twitter will be around for as long as it takes to become a sustainable business

Re: Twitter Fills The Tank

Chris Frost — Sat, 14 Feb 2009 07:41:00 -0000

Fred, why do they need this money? In a post a few days ago you said how you thought it was good your companies had small teams, low burn rates etc.

Twitter's software is easy to build, the service is viral and you need proper server infrastructure and admin - what do you need $35 million for?

Re: Twitter Fills The Tank

howardlindzon — Sat, 14 Feb 2009 02:53:31 -0000

congrats

Re: Twitter Fills The Tank

Guest — Sat, 14 Feb 2009 00:50:48 -0000

Did Bezos pony up, too?

Re: Twitter Fills The Tank

S.t — Fri, 13 Feb 2009 21:28:47 -0000

I agree w BmoreWire. The $500mm offered the Facebook offered (rumor) is a joke.

Fred, you've written some pretty favorable posts on Google's Latitude. Can Twitter users merge their Twitter accts w Outside.in for a similar user experience?

Thx

Re: Twitter Fills The Tank

chrisherbert — Fri, 13 Feb 2009 21:02:13 -0000

Thanks for the answers. The conflict question struck me as I was
reading the post so figured the AVC community would know.

And agreed, I wouldn't pick Keystone as my first choice either but
sounded like Fred was already going there. A-Basin was always my first
choice for Summit Co., less resort pretentiousness, it's just about
the skiing there. Went to school out there but neve made it to
Silverton Mountain, that should be on top of everyone's list.

Re: Twitter Fills The Tank

coldbrew — Fri, 13 Feb 2009 19:58:39 -0000

I think I answer, since Wilson is gettin' his apres-ski on :

1) It is very typical. If a startup has the same fund lead each round, it is often a red flag. The goal is to spread the risk and increase business connections.

2) The mechanism for management is the Board of Directors, like most company's. You'll note the 2 new board members representing each firm, respectively. And, they have disagreements all the time, to be sure. Good firms will augment their advice with BD skills, using their connections to make deals happen.

I disagree on the skiing advice, however :) Head to Monarch, they just got a foot of snow and the Frontrangers will descend on Summit County tomorrow.

Re: Twitter Fills The Tank

chrisherbert — Fri, 13 Feb 2009 18:32:43 -0000

Congrats Fred and USV. two quick questions:

1) Wondering how typical it is to have several VCs invested in the same company (or what the average number of VC investors is, or maybe there is no average number, it just depends on the situation and the company).

2) You specified that USV & Spark are re-investing to maintain an ownership position. VCs obviously bring more than just capital to to the table so when multiple VCs are involved, what's the process for managing the strategic advice coming from different VCs? Not suggesting that there will be disagreements on fundamental things like strategic direction but wondering how a startup works with advice & support coming from different actors in the investment.

Thanks and hope you're hitting the slopes at Keystone. Hit the Outback for the good stuff. Cheers.

Re: Twitter Fills The Tank

BmoreWire — Fri, 13 Feb 2009 18:27:38 -0000

The best thing that Twitter can do right now is NOT sell itself. Simple as that. So I'm glad to see they are storing away some nuts for the long winter.