Roger Ehrenberg is the managing partner at IA Ventures. Prior to the tech world, Ehrenberg was an investment banker and at Citibank and Deutsche Bank.
Q: You always remember the ones that got away. Tell us about the startup you regret passing on the most.
A: During my angel investing days, probably Foursquare. Not yet enough data to discuss regrets at IA Ventures. But I will say that I regret misses far less than I regret poorly-selected investments. While I find the “anti-portfolio” concept interesting, I am much more focused on my success in picking and nurturing winners than scrutinizing the ones that got away.
Q: The last thing you want to hear from a founder is…
A: “… I have some bad news. And I should have told you about it two months ago but didn’t.” Lack of communication and transparency is the death knell. As an investor, I prize honesty, humility and disclosure more than words can express. Bad news first. Acknowledgement then analysis of mistakes made. Then good news. I do this with my venture LPs and expect the same from my portfolio company CEOs.
Q: What “me too” trend should we avoid or invest in?
A: Lightweight “social shopping” applications. Some will succeed, most will fail, almost all are features and are neither products nor companies. We have literally seen dozens of these. We’ve also seen a steady stream of “social media monitoring” dashboards and applications. An important tool? For sure. But enough already.
Q: What’s the weirdest pitch you ever heard?
A: I honestly haven’t heard too many weird pitches because I’ve always screened so rigorously both as an angel and as a venture investor. By the time someone comes in for the face-to-face pitch, we already have a very good sense of the vision, the early plan and the key questions that need to be answered for us to invest. Nothing totally wacky. Now for ideas submitted via email, that is an entirely different story! Perhaps I’ll have to come up with a Top 100 list sometime.
Q: What’s the best way to ride out a bubble?
A: Be ruthlessly disciplined about sticking to one’s investment mission, avoiding temptation to be caught up in the frenzy. If prices are moving away from you to the point where you’re asking yourself “Are things really different this time?,” put your wallet back in your pocket and sit down. Rationality doesn’t change just because some subset of the market has seemingly re-defined it within a narrow slice of time. Perhaps more importantly, ensure that you are holding ample reserves against your development-stage companies to ride out a difficult fund-raising period. Bubbles are generally followed by busts, and you want to be in the position to support your companies and to take advantage of others’ inevitable liquidity problems.
Q: Explain, without jargon, what the word pivot means to you?
A: Pivot is a hackneyed and non-descriptive term. What I think people are trying to say is in the course of bring a product or service to market, it become clear that the product/service is not what potential customers want. Company founders then work to find the right product/service for the targeted customer set leveraging existing IP, or to discover a new customer base against which to test market interest. Sometimes the change is incremental (targeting a different vertical – countless companies), sometimes it is significant (Buddy Media => FB AceBucks => FB App Development => FB Pages platform) sometimes it is massive (Odeo / podcasting => Twitter / messaging). This is what I think people mean by “pivot,” which as you can see is too general to be useful.