E838: David Sacks Craft Ventures $350m raise, big Bird bet, VR, crypto, Yammer, Zenefits, investing

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E838: David Sacks on raising $350m for Craft Ventures, betting big on scooter unicorn Bird & transforming transportation, future of VR & crypto, lessons scaling Yammer from 0 to $1b, cleaning up Zenefits, keys to frictionless flywheel & great early-stage investing @ LAUNCH Angel Summit

Show Notes:

00:25 - Jason introduces David and explains how he became the first LP for LAUNCH’s first fund. Jason dives right in and asks David what he learned from scaling Yammer and selling to Microsoft for $1B - and what has changed since then.

David says Yammer was like PayPal in that it exploded over a three-year period. He says the best products work right away and that such rapid growth happens mainly in the consumer space.

04:33 - Jason asks about Zenefits and how rapid growth can sometimes cause founders to trip. David says the growth-at-all-costs mentality causes problems when other priorities, such as compliance and gross margins, fall by the wayside. It’s also important to ensure it’s possible to keep customers happy while expanding.

07:42 - Jason asks about scooter company Bird, why David invested at a $50M valuation, and how, just nine months later, Bird is valued at $2B. David says demand seems limitless and revenue has grown quickly. He says it’s a classic example of a transformative company that starts out looking like a toy. He says it represents a new mode of urban transportation.

11:05 - Jason thanks sponsor Fin, a personal assistant service. Visit fin.com/twist to try it for free.

12:58 - Jason asks what Bird must do in the next year or two to live up to its valuation. David says Bird invented the space and it just has to continue executing and launching in more cities to remain the leader. He says Bird can compete with other big players (Uber, Lyft) because expansion is frictionless. It has low overhead and doesn’t bother with leases, warehouses, etc.

18:34 - Jason thanks sponsor Walker Corporate Law. Call 415-979-9998 or visit walkercorporatelaw.com

21:24 - Jason asks how cities should deal with scooters being deployed on the streets and what Bird has done right and wrong. David says Bird has proposed a regulatory framework for cities. Includes a dynamic cap on deployment based on use, a requirement for picking up scooters each night, more. Bird also proposed a revenue share with cities. User education regarding how and where to ride is critical.

25:35 - Jason asks about Segway as a precursor to the on-demand scooter boom. David says Segway is a classic example of a “too-soon” product. Such products have a kernel of a great idea, but the interface is too complicated and functionality is too weak.

27:35 - Jason asks David about Craft Ventures raising $350M in three months. David says it was possible because he was able to show LPs an extensive track record. Jason asks about David’s angel investments, investing in Facebook, and that company’s recent trouble with data privacy, election meddling, etc. David cites engagement metrics and News Feed as early indicators of success for Facebook.

32:52 - Jason says David was very enthusiastic about crypto and VR a couple of years ago and asks how he feels about them now. David says both spaces are “too soon” because they lack the friendliness needed for mass adoption. VR needs stronger, untethered hardware and multiplayer software.

36:46 - Jason asks if Craft Ventures is tightly focused on crypto and what David’s take is on the crypto value crash. David says Craft is open to and interested in crypto. It is a theme but not exclusive. David talks about which crypto bets are the most interesting rather than coin value.

39:14 - Jason asks about robotic coffeebar company Cafe X and what about that company interests David. David says the product is beautiful and the coffee tastes great. Like Bird, it has potential for real-world virality. Just displaying one in action generates new customers and property managers who want the machine. He also covers removing friction for growth.

42:12 - Jason asks David to provide advice for angel investors who have started in the last five years. David says pattern recognition is key, and that it takes time and emersion to be good at it. Investors should support the best people; ideas are secondary. He also says it’s good to capitalize on a breakout company by buying additional shares.

David also talks the pros and cons of founders keeping their investor list short.