Five Questions Charlie O’Donnell Asked Me to Answer

So, I was going to do a Five Question Interview with my friend Brooklyn Bridge Ventures founder Charlie O’Donnell but he turned the tables on me. Charlie suggested that I answer five questions from him on my blog and he’d do same on his. Mine are below and you can read Charlie’s here.

Charlie: What’s on your priority list to learn how to do better as an investor?

Hunter: Two main priorities – refine my own playbook and iterate/learn with the urgency of a startup, not a typical VC fund. I’ve written before about ‘playbooks’ and my desire to not be Fred Wilson 2.0, Brad Feld 2.0 or Marc Andreessen 2.0 (or any other notable investors) but Hunter Walk 1.0.

For Homebrew overall, Satya and I have a 20 year roadmap that we’re executing against. Our “product lines” are Credibility (in the marketplace), Community (among Homebrew founders, advisors, friends) and Counsel (high quality and scalable). We aren’t interested in just raising money, making some investments and seeing what happens. The way we think about it is, we have a small number of principles and a large number of hypotheses. We’ll stay true to our values while we test and evolve our tactics.

We raised our first fund on reputation and history. Our second fund on momentum. Come fund three, it’ll be results more than retweets that our LPs are judging us on 🙂

Charlie: Mark Zuckerberg leaves Facebook to start a new company.  He’s raising $20mm on a $200mm post for an idea on a napkin.  Are you automatically in, do you ask him what the idea is, or do you pass on valuation?

Hunter: Our model is to make 8-10 investments per year where we believe we can commit enough capital (aka ownership) so that a successful outcome can be meaningful to our fund. So let’s say we did $1m of that round. In order to return 1x our fund ($35m), he’d need to get to $7b valuation. Bet on Zuck 🙂

Charlie: Who are the three most underrated investors in venture capital?

Hunter: “Most underrated” is tough to answer so I’m going to answer slightly differently: here are three investors at different stages who I think are great and don’t seek out press or brag as much as some of us do.

Angel – Scott Belsky

Scott founded Behance and is also an active angel investor. We’re lucky enough to count him as a friend and Advisor to Homebrew. He’s an investor in Uber, Pinterest, Warby, Shyp and many other successful startups. There are MUCH less successful angels who crow about their wins. Scott is just an amazing smart and decent guy who really works with his investments. A gem.

Seed – Manu Kumar/K9

Another guy who stays out of headlines unless he’s helping a portfolio company or discussing an industry POV where he has actual experience, not just ‘content marketing’ bs. Invests seed stage in wide variety of companies but special love for true tech based startups. We haven’t coinvested with Manu yet but would look forward to doing so in Fund II.

Multi Stage – Ethan Kurzweil

Ethan is earlier in his career but has Twitch and some other exits on scoreboard and Twilio lined up in IPO chute. What I appreciate about Ethan is that he’s always going to have his own opinions and not just chase sexy shit. By the way, I was tempted to call this category “later stage” because it totally pisses these guys off when you call A Round “later stage.”

Charlie: Any misses, and why did you pass?

Hunter: We’ve written about our losses on my blog. Regardless of financial outcomes – we’re only two years in so even companies that have marked up significantly aren’t “winners” yet – I think I’ve got two regrets.

One was a situation where I probably overthought the way I would approach the problem vs trusting the founders. The other was one where Satya and I disagreed (I liked, he didn’t) and I wish that I would have done more work on it to push towards conviction. Instead his thoughtful questions had a chilling effect and we passed. Too early to know whether it was a “miss” or not, but in retrospect, I didn’t like my reaction.

Charlie: What opinion do you have about venture capital that would be generally unpopular with entrepreneurs?

Hunter: Not sure there’s anything about VC I believe that would be generally unpopular with entrepreneurs, although I have some thoughts about VC that would be generally unpopular with other VCs! But since that wasn’t the question, I’ll try to answer what you asked. One opinion we have that isn’t universally held by founders is the value of adding an external Director to your Board at seed stage. My partner Satya has written about this more extensively, but it comes down to helping a founder build the cadence of running their company before they go raise an A round. We believe coming up for air every 4-8 weeks to discuss one or two strategic questions about the startup is critical and gets founders more prepared to raise a strong A Round because they can discuss both the current state of their business AND their longterm vision.