
I am a junior angel in Silicon Valley. AMA - joshu
I occasionally invest in startups. Please chime in if you are also an angel.
======
patio11
1) Entrepreneurs need to understand that [ ... ] or I will stab their eyes
out. Please fill in the blank.

2) What is the most broken thing about angel investing?

~~~
joshu
> Entrepreneurs need to understand that [ ... ] or I will stab their eyes out.
> Please fill in the blank.

Communication is key. If you want people to do things, you must communicate in
ways that facilitate the action. Make it easier for me as I am bandwidth
constrained.

> What is the most broken thing about angel investing?

I haven't been doing this long enough to have a sense for that, which is
surprising. I am frequently cranky about things that don't work well.

~~~
joshu
Funny story: When I see names in the press that look familiar, I often check
to see if I've communicated with them. I saw an article about a company that
raised money, and checked, and sure enough I had talked with them about it.

The entrepreneur had written ten paragraphs. I sent a "sounds interesting,
send screenshots or a prototype" and they wrote ten more paragraphs. I didn't
follow up.

However, smarter people than me invested, so what do I know?

~~~
random42
Probably you made him realize the importance of screenshots and working
prototypes, while pitching.

------
pg
I think you can safely say you are an intermediate or advanced angel.

~~~
joshu
I guess junior is opposite to senior. I don't sit on boards, I don't lead
deals, etc.

~~~
mattmaroon
Why don't you lead? I found when raising money that a lot of angels are like
that. Is it just a time thing? If you found a startup you really loved, would
you lead then, or just try to get someone else to?

~~~
joshu
I don't think I know enough yet.

------
aditya
* What do you like to see before you invest? idea? product? traction?

* What do you give more importance? idea or team?

* You've had incredible dealflow recently, how are you getting into all these deals? (Foursquare, Square, StackOverflow, DailyBooth, Canv.as)

* Since you don't lead, if you run across an interesting startup, do you make introductions or only co-invest in deals that come from other people?

* Better location for a pre-funding consumer internet startup: NYC or Bay Area?

* Bootstrap or raise money? Any particular reasons to choose the former or latter?

~~~
joshu
> What do you like to see before you invest? idea? product? traction?

I am trying to build intuition. So some of this is gut sense. Sometimes I look
at deals and say, this is obvious. Sometimes I have to sell myself.

I look for new things that are in spaces that have a comfortable
competitiveness climate.

> What do you give more importance? idea or team?

Both are important. See above.

> You've had incredible dealflow recently, how are you getting into all these
> deals?

Luck is a matter of being in the right place at the right time, so I take care
to be everywhere. I know everyone. Foursquare: I knew Dennis from NYC. Square:
I knew Jack from twitter. StackOverflow: I was on a panel with Joel once.
Canvas: I suggested moot to TED and introduced myself at the conference.
Dailybooth: Asked for an introduction to me.

> Since you don't lead

If I like the product, I introduce it to relevant people.

> Better location for a pre-funding internet startup

I'm fond of both NYC and Bay Area. I started Delicious in NYC.

> Bootstrap or raise money

Venture money is only useful in some situations - where capital will help grow
the business. I also want to see something where I will conceivably get out
someday; that's either acquisition or IPO. Do many privately held companies
pay dividends?

~~~
aditya
Thanks! To rephrase the NYC vs SF question, if you were starting a new company
today, where would you do it?

~~~
joshu
Personally I would be ok with either. I know great investors in NYC. There are
more investors in the Valley. If you have something that is harder to get
funded, it may be easier here.

------
pclark
I think that delicious is really awesome. I still use it pretty much every
day, even though if anything the product has almost declined in quality over
the past few years.

It feels like Delicious could have been the start of something even larger
than a bookmark service, it's my primary resource for finding specific content
(eg: rails + tutorial, photo + howto, etc.) I'm aware that that is a fairly
large technical barrier in terms of how search works, but I feel it proves the
potential for something really, really awesome. A real social search engine if
you like.

Ever thought about buying it back off Yahoo?

~~~
foomarks
I second this! Please someone buy back Delicious, or make a new one:

\+ Delicious is lagging behind in mobile support.

\+ Delicious could be taking more advantage of the conversation that people
are having in their Notes section.

\+ Delicious could be taking advantage of the links that are shared between
users: help me find users that have similar but unique interests as I do. This
would be true social networking on Delicious!

\+ Delicious places priority on what is "Hot". This is not terribly useful
since a lot of "Hot" links have already made the rounds on Twitter or in my
Google Reader first.

\+ Delicious could be taking advantage of links that are not yet popular but
have a strong interest in category niches.

\+ Delicious could be taking advantage of a user's top 10 tags: it's not an
accurate assessment of a user's interest, but it gives me a quick assessment
if I want to subscribe to their feed.

(I wish I could make another Delicious, but I'm not a programmer!)

~~~
joshu
I actually did at least several of these. But they forgot how those parts
worked and rewrote them poorly.

------
swombat
What's the best way for start-ups to get in touch with you? Do you respond to
email pitches? What's the worst way to get in touch with you? Have you ever
invested in a start-up that pitched you by email?

~~~
joshu
Do something that I've heard of before they end up in touch.

Cold emails rarely turn into anything.

------
paulgb
The "valley advantage": what attributes of a business makes a company most
able to take advantage of the valley? Do this apply to b2b as much or just
consumer tech?

PS for the uninitiated, AMA = ask me anything

~~~
joshu
I think the Valley offers much easier access to funding. There are also lots
of support organizations here -- lawyers, banks, etc, who will understand your
needs much better.

I don't understand b2b and am terrified of it.

~~~
jasonlbaptiste
What terrifies you about b2b (besides not understanding it)?

~~~
joshu
Sales. Seems very hard. Not that that route is bad but I understand b2c
better,

~~~
jasonlbaptiste
What attributes of twilio/weatherbill made you overcome this fear?

~~~
joshu
Good question.

Weatherbill was an earlier investment. I still wish I had put more in. I
remember the exact line that convinced me: "You can upload your Quickbooks P&L
and we'll calculate your exact exposure to the weather." I guess I like novel
marketplaces more than I dislike b2b.

For Twilio, it was the quality documentation that convinced me.

Both companies have kick-ass CEO/founders.

------
xg
Three questions:

1) Why do you find it harder to code these days? Does that bother you? It
seems like you're still keeping up with a lot of python stuff from your
delicious tagging.

2) Why hasn't anyone advanced the ball past delicious with bookmarking? I'm
still a delicious nut, but I really want good search tied into it. Is there no
business model or no real use to the data?

3) Do you believe in the Ron Conway style of angel investing? IE. invest in
many interesting companies for better returns? Do you ever participate in
follow-on rounds?

~~~
joshu
> Why do you find it harder to code these days?

I don't know. Too many distractions and anxieties? There's a lot of noise in
my head. Yes, it bothers me.

> Why hasn't anyone advanced the ball past delicious with bookmarking?

I don't know. I should restart Muxway (the delicious predecessory)

> Do you believe in the Ron Conway style of angel investing?

I don't know enough about Ron's model to make a judgement. All we know is that
it generates more "buy" decisions. I think that having a larger portfolio is
stronger. Sometimes I do participate in follow-on rounds.

------
joshu
So far I'm surprised that a) nobody has really asked about exits or returns b)
people that have asked questions about their own situations have been
incredibly vague c) no questions about background or current work or d) no
questions about delicious's creation, founding, and later sale.

~~~
_delirium
Sort of on a): Are non-exit returns ever something you think about? E.g. the
possibility of buying into the next craigslist and getting x% cut of some
large revenue stream, but never getting an IPO or buyout? Or is that just too
uncommon, and/or people with those intentions never cross your radar because
they don't seek funding rounds?

~~~
joshu
I don't know specifics about craigslist, but I haven't heard of anyone who is
an investor of a company that pays significant dividends. Not saying it
doesn't happen, though.

I suspect that folks who have large revenue streams imminent would go to some
effort not to dilute themselves.

------
thejo
* How do you hear about the startups you invest in? (Introductions from people you trust?)

* What is the one piece of advice you would give to people who pitch their startups to you?

* How do you add value?

~~~
joshu
> How do you hear about the startups you invest in? (Introductions from people
> you trust?)

They come from all directions. One of my best investments came from a chance
meeting with the now CEO at a party.

> What is the one piece of advice you would give to people who pitch their
> startups to you?

Hard to explain. I do a lot of this by gut sense. I look for: \- strong people
doing things in interesting spaces \- belief but not inflexibility; religion
is bad. \- an ability to roll with the punches: reactions are as important as
planning

> How do you add value?

I am a product guy, so I look at the product and can evaluate it. Same thing I
use to choose the investments, I guess. I am also reasonably well connected
and will use that as asked.

------
clutchski
I heard you built one website a month, hunting for the right idea, until
delicious clicked.

Would you ever fund a person you believed in for that kind of exploratory
work?

~~~
joshu
I tried to build something interesting every year. I originally set out to be
some sort of expert in social software (I think I succeeded, more or less) way
back. In the past I built memepool and geourl and a bunch of other things
you've never heard of.

However, I never really had the idea of building businesses, just interesting
things. I wanted to get attention (I got myself invited to Foo Camp before I
did delicious, for example) from folks outside my industry, as I worked at an
investment bank.

I still build some small things here and there. I find it much more difficult
to program now, though.

~~~
rokhayakebe
_I still build some small things here and there. I find it much more difficult
to program now, though._

Care to share any links?

~~~
joshu
The last thing I was tinkering with was <http://lensdb.com/> but it still
needs a lot of work. I haven't worked on it in months and months.

I'm thinking of building an app to help manage my angel deal flow, of all
things.

~~~
stefanobernardi
You have mail regarding that.

------
bramcohen
Was the recent stock market plummet your fault? Did you sabotage the
investment banking industry on your way out?

Do you do back channel reference checks on founders?

~~~
joshu
You can't prove anything. I have an alibi.

------
adrianscott
I've done a series of angel investments, but was most active 99-01.
Performance would probably put me in top decile v.c. for that time.

Had two liquidity events in last 2 years from advisory shares. Expecting an
IPO in next year.

Most famous startup I passed on: Paypal, back when they were doing palmpilot
stuff. ;)

Most famous startup I invested in: Napster, which went bankrupt

Best return: Giganet, acquired quickly by Emulex. Haven't heard of it? Could
there be a connection? ;)

Present day: In the process of closing an angel round for my own new startup,
mainly from friends I've known for a while who've built and sold off
companies, plus a small number of friend of friends.

~~~
joshu
> Paypal

Ouch. I know the feeling.

Doesn't Emulex make connectors?

I would like to see some liquidity someday myself.

What's the startup?

We overlapped - I was at BofA Securities. My boss went on to Epoch Capital and
then Schwab.

~~~
adrianscott
>> Paypal >Ouch. I know the feeling.

;) Yah, I also could have been in on Salesforce.com and a recent flip to MSFT
if I'd pushed a little harder...

>Doesn't Emulex make connectors? Wow, I haven't looked at Emulex in so many
years. That was at beginning of the decade...

>I would like to see some liquidity someday myself.

It'll come... it's funny that period between deal announcement and closing and
liquidity, particularly w/ restricted stock and such. And also the ones that
have taken 10 years to become liquid ;)...

> What's the startup?

Fosdev, I'll drop you a note.

> We overlapped - I was at BofA Securities. My boss went on to Epoch Capital
> and then Schwab.

Hehe, cool, I was helping Schwab Inst. first, then BofA Global Markets Group.

------
einarvollset
Hi Joshua

Would you invest in a pure mobile play (i.e. Something you needed a specific
type of phone for)?

Reason i'm asking is that I quite often hear "yeah but what about everyone who
doesn't have an XXX".

Cheers,

Einar

~~~
joshu
I am not fond of secondary franchises. If you are going to live in the shade
of one tree, it'd better be a huge fucking tree.

I am also not fond of temporary opportunities. If you are doing X for Android
because there's a successful X for iPhone and nobody has done it yet, then
it's not a scaleable business.

~~~
mattmaroon
It worked pretty damn well for Playdom. They did X for Myspace because there
was an X for Facebook and it took them to a huge amount of revenue.

It's scalable as long as you can keep finding new Xes indefinitely.

~~~
joshu
Sure. I'm not saying it won't work - I'm just saying what I prefer to invest
in.

Lots of things that I pass on go on to get acquired. It often makes me feel
stupid and doubt my strategy and decision-making.

I'm also not entirely sure that I'm actually any good at this.

------
johns
Has working at Google while being an active investor ever led to any conflicts
of interest?

~~~
joshu
I generally avoid stuff that relies on heavy SEO or otherwise obviously
directly competitive. Although I'd avoid some of that stuff merely because it
is bad for the ecosystem before I worry if it bothers my employer.

I'm pretty clear where I work and what my burden of responsibility is. So
entrepreneurs will end discussions when they learn where I work if I wasn't
aware. Usually if there is a conflict issue it ends there.

I invest small amounts relative to my net worth and am unlikely to compromise
my behavior for an investment. The E(v) of an investment, if you assume the
33% chance of a > 3x return is still not that big.

Although: Yahoo compliance forced me to pass on the first round of Twitter.
Yet another reason I am annoyed at them.

~~~
jedc
> Although: Yahoo compliance forced me to pass on the first round of Twitter.
> Yet another reason I am annoyed at them.

Ouch. I would have thought you'd use a stronger word than "annoyed"!

------
jmillerinc
What maximum % of your net worth would you allocate to angel investments?

~~~
joshu
<http://en.wikipedia.org/wiki/Kelly_criterion>

~~~
jmillerinc
Great. Any thoughts on parameter values?

~~~
joshu
According to Fred, 2 in 3 startups return even or fail, and 1 in 3 succeed.

Assuming I'm doing as well as he is (which I doubt) and that an exiting
startup gets 10x the input, the formula suggests 25% or so.

This seems high. Also, startups are not independent bets. Who knows?

I've done 34-ish investments. One small exit. Two are doing very well. Two or
three dead companies (sometimes, it is hard to tell.)

~~~
timcederman
34ish and you say you're a junior angel?

I guess that makes me a junior associate at best.

~~~
joshu
I can't or won't negotiate terms, lead a round, syndicate a deal, or sit on a
board.

So that makes me subordinate to people who do these things; they are therefore
my senior.

------
coffeemug
Do you get many business proposals from friends or relatives that you consider
bad or uninteresting? How do you tactfully reject them? In general, did you
have relationships with friends or relatives that changed in a significant way
once you acquired a non-trivial amount of wealth?

~~~
joshu
A lot of friends are in the business. A bunch of the things I have invested in
are things started by friends.

------
shawndrost
What portion of your investments are outside of the bay area? (If you travel
frequently to NYC, exclude that too. I'm interested in how much remote
investing you do.)

~~~
joshu
None.

~~~
jonpaul
Is that because you won't invest outside the Bay area?

~~~
joshu
Yes.

My network drops off very rapidly outside the Bay/NYC. So 1) I don't see as
much stuff that way. 2) I'm less useful/valuable outside that area. 3) The
companies will have a much tougher time outside that area.

------
huangm
1\. What matters most to you: team, market or product?

2\. You've said that you typically don't lead rounds and let others lead
instead. What other angels do you respect the most?

3\. Are there any deals that you regret passing on?

~~~
joshu
> team, market or product

All are important.

> other angels

There's a lot of great angels out there that I like to learn from. Aydin
Senkut has shown me a lot that I've liked lately.

> deals that you regret passing on

There are always surprises. I think it's important to compare my feelings at
the time I passed to the current feelings to benchmark my intuition.

What I regret more is companies I did want to invest in but either flubbed or
wasn't able to get into.

------
bdevil1
Say you have an idea for a web startup, you're working on a prototype in your
spare time. How should one make the jump from side project to getting funded?
How did you do it with delicious?

~~~
joshu
Delicious started getting noticed a great deal. Press, etc. I think I had
30-40k users right before I started talking to Fred. This is in the days
before user inflation, mind you.

I got several offers of acquisition for delicious in the 250k-500k range, and
felt that if I actually worked on it full-time it would be worth more.

I turned down eight or so acquisition offers before I took VC.

~~~
bdevil1
How did you host/fund it prior to taking VC? Was it so low maintenance that
this wasn't an issue?

(Many have said this already, but thanks for starting this thread. Very
insightful.)

~~~
joshu
It wasn't that expensive to host.

At the time I got funding, I had 3u via an ISP
(<http://www.atlanticmetro.net/> now) in Telehouse. One of the servers I
bought, and one was mailed to me out of the blue by Marc Andreessen.

------
auston
* What is your favorite investment to date?

* Was delicious boot strapped?

* How do you feel about a publishing co (a la O'Reilly or PeepCode) as an investment?

~~~
joshu
> favorite investment

They're all my favorites. I try not to do the ones I hate.

The ones that seemed very obvious to me on first conversation were Etsy,
Weatherbill, and Twilio.

> delicious bootstrapped

I worked on it for two years before raising funding. But I did raise VC.

> a publishing co

Feels like a long slog. I'm not fond of content as a business.

------
mayop100
Whats the best place to raise $200k for an early-stage internet startup. A
single angel? A group of angels? A seed fund?

~~~
joshu
I guess anything that works.

In my experience, companies raising less than 500k are making a huge mistake.

~~~
rdl
Is there anything you'd invest $10k on a $4mm pre in that you wouldn't invest
$25k in on a $4mm pre? Assuming a $500k-1mm raise.

i.e., do you invest within your range based on your feelings about the
investment, or just how oversubscribed the round is?

For me, a $10k investment and a $25k investment would take roughly the same
amount of thought and time, so really it's just a 2.5x bigger payoff if you
win.

~~~
joshu
Usually. 10k is when it feels more speculative. But often it is because I got
cut down.

------
adityakothadiya
How does a startup approach/contact you if it's looking to raise funds? I
understand you don't lead the rounds, but you might potentially introduce a
startup to lead investors.

~~~
joshu
Figure out my email and send it to me, but I may not respond.

A better idea would be to send it to AngelList.

~~~
adityakothadiya
Great. Thanks for the recommendation.

------
gyardley
How should entrepreneurs screen potential investors to avoid personality or
other conflicts?

Assuming you failed the above, how do you deal with an investor who's being
difficult or disruptive?

~~~
joshu
That's a good question.

You have to talk to other entrepreneurs who took investment from the angel.

While any shareholder can cause problems, especially at that stage, a small
percentage / non-board angel can't do TOO much damage, I think. But I've never
really been in the situation. Ask grellas.

------
bjonathan
Hi, I'm raising money for my first startup (Business angel round) and I read
lots of blogs to be familiar with the
process(Dixon,Suster,Wilson,VentureHacks) but I am still eager to learn more
about the subject. Do you know other good ressources (blog, book,video) to
learn about how to raise money and the mechanisms ?

Thank you

~~~
joshu
Those are good resources. You also need a good lawyer. All of the folks you
mentioned are good people.

------
johns
Will you ever lead rounds/negotiate terms? How many more deals do you think
you'll do before you reach that point?

~~~
joshu
Dunno.

I don't invest enough dollars to have that right. I don't have enough purse to
increase the dollars I invest.

More importantly, I do not have enough stroke within the community to do this
kind of thing.

I also am probably not ready to be a fulltime investor any time soon.

------
mwerty
Why are you an angel investor? Since thats super-broad, here are some options
(feel free to add more):

1\. You think you can make decent returns.

2\. You like helping people.

3\. You find it a great way to avoid getting bored.

~~~
joshu
1 and 3, definitely.

I also like being near interesting projects.

------
paraschopra
1\. Do you ask startups how _exactly_ they are going to spend money? Or are
you fine investing even if team doesn't know where each penny is going to be?

2\. Since you must be involved with a lot of startups, how much time,
attention and guidance you are able to give to an individual startup?

~~~
joshu
Use of capital is a typical open question. But no, I do not ask for a budget.
They should spend most of it on people and the rest on other constraining
resources.

A lot of them no longer need my help. Many don't use the time I do have
available. I have plenty of time for my day job and even playing video games.

------
grandalf
What value do you add (besides the money) to a project you invest in?

~~~
joshu
My product sense, mostly. My connections, a little. I try not to bother the
founders unless they ask for help.

~~~
christonog
How much are you willing to be available to the companies you are invested in?
Does your bandwidth allow for companies that would like some product advice,
but aren't interested in funding at the moment? If so, what's the best channel
to ask?

------
maxklein
Let's say you invest 25k in a company. What's your expectation on when you
will receive money, and how much are you expecting to receive?

~~~
joshu
I don't really think that way. Instead: will this be an enterprise worth being
involved with? For example, are they going to change the world and make
people's lives slightly better? Or do they, I dunno, write boring iPhone apps?

~~~
maxklein
So you're doing it to improve the world and not for the money?

~~~
joshu
I call false dichotomy.

~~~
maxklein
Obviously.

You are trying to make money. I am asking - when will you make the money and
how much? If I put 25k in a business in 2008, when will I see a return and how
much would that return be?

Or are you just doing it to be associated with these companies?

~~~
joshu
I don't know. I expect it will take 5-10 years to get a return in many cases.

I think this pays vast dividends outside of dollars: I get connections,
notoriety, experience, exposure, and so on. I know about a lot of what's going
on in the valley right now, for example.

I expect it will be better than investing in venture funds, but not by much.
(I do this too.)

------
runT1ME
Would you have any advice for a startup that needs advisors and experience
growing a company more than it needs straight up cash?

Is a company that makes this known a turnoff for angels, as by doing so it
admits it doesn't have 'everything quite worked out'?

~~~
joshu
Find some advisors and mentors, then.

Honestly, set yourself up to make some mistakes and learn from them. Advice is
rarely that useful.

If you don't need venture capital, don't raise. It sets certain expectations
and puts you on a specific path.

------
jonpaul
I'm a big fan of the ideals of 37 Signals, such as embrace constraints,
bootstrapping, etc. But, I feel that my day job is getting in the way i.e.
time. Should I take the plunge and seek angel or continue on my bootstrapping
adventures?

~~~
joshu
Not enough info. I switched to fulltime when my day job felt less important.
Your attention and time are the scarce resource.

------
samd
In general how far along is the startup by the time you invest?

~~~
joshu
I really want to see a working prototype first. Rarely do i invest without
that.

~~~
edanm
How far along do you expect a prototype to be?

E.G., if I'm building a social web app, do you expect to just see a prototype
with a few of the basic concepts? Or do you expect a first version that's
already online and starting to get users?

~~~
joshu
The latter. You aren't learning anything until you are interacting with users,
and learning is the most important thing you can possibly be doing.

Through friction the apple is polished, I think.

------
bramcohen
Why aren't you starting a new venture yourself?

~~~
joshu
That is an excellent question.

~~~
kalvin
If, hypothetically, you were starting a new venture yourself, what kind of
change would you want it to make in the world if it succeeded?

~~~
joshu
One axis along which businesses find themselves has "direct utility" at one
pole and "perceived utility" on the other. Perceived utility is stuff like
sugary drinks, or pictures of attractive people, or whatever; we're drawn to
like those things because of our psychology and evolutionary background. I
don't mean to sound negative - if people like the things they can be good
things. Like video games, for example.

I think that no business or product exists at either extreme (delicious, for
example, over-empowered people's need to collect things; video games are
inadvertently good at improving reaction time etc) but I'm pretty sure
anything that leans toward direct utility and is large is going to have a
significant positive impact in the world. I think Google is a pretty shining
example here.

The things I like to build tend toward the "direct utility" side of things.
Hopefully they will be large...

------
pavs
I really enjoyed your Reddit AMA

[http://www.reddit.com/r/IAmA/comments/azgs6/iama_guy_who_sol...](http://www.reddit.com/r/IAmA/comments/azgs6/iama_guy_who_sold_his_startup_and_i_have_like_20m/)

~~~
joshu
Ha. Not me, you can tell by the top section. He claims to be happy.

~~~
pavs
oops sorry. I did see your comment on that thread and didn't check the
username of the OP. There are quite a few similarities between that guy's
story and you, so I made an unverified assumption.

~~~
joshu
You weren't the only one. I think I wrote him to ask if he had any rich guy
tips. I don't think I got any good ones.

~~~
pavs
On topic. I _really_ want to do this.[1] Whats your opinion? Sent a proposal
to kickstarter yesterday, waiting for reply.

[1]<http://news.ycombinator.com/item?id=1351584>

~~~
joshu
Sounds like an interesting idea.

A revolution in education is imminent. Better measurement, statistics, and
analytics in the real world, better connectivity in the offline world.

~~~
pavs
Thanks for looking at it.

This is something I wanted to do for sometime, Salman Khan's video just re-
ignited the passion I had when I first thought of it (I still have the
detailed ~10 page draft lying around somewhere). I am hoping to go all-out on
this, not sure how to approach some of the non-technical problems but I am
researching/working on it. One way or another I will find a way and make this
happen. rápido.

------
toppy
Have you considered investing outside US, Central Europe for instance?

~~~
joshu
Not really. Maybe if I visited there. I don't like doing deals sight unseen.

~~~
toppy
Why not? In Poland we have beautiful girls ;) Additionally put an eye on
<http://www.globstar2010.com/en/index.php>

------
gruseom
What's something a startup has done that most surprised you by working when
you expected it not to work?

~~~
joshu
Startups don't generally tell me about their decisions often enough for me to
be able to benchmark this, I think.

~~~
gruseom
Well that brings up my other question, which I wrote and deleted: what's the
median frequency with which you talk to startups you've invested in, and how
does that change (in a given case) with time?

~~~
joshu
They typically stop talking to me after the next investment (usually, when
they have a Board of Directors they are responsible to)

Most startups do not update the non-board investors much.

I am on IM most of the time. There is a "Founders" section in my buddylist.

------
rokhayakebe
Would you invest in a used car dealership? (I am not even joking. I am
launching one later this year.)

~~~
joshu
I invested in Carwoo. Probably a conflict.

------
carpdiem
What's the most unexpected thing you've learned along the way?

~~~
joshu
Saying "no" is the hardest part. Entrepreneurs are by nature a persistent
bunch.

------
mdolon
When investing, how important is a founder's educational background and work
experience? What do you think is the best indicator of a successful founder?

~~~
joshu
I would like to see people who have succeeded in tough environments. Some
degrees are like that, some are not. Evidence of having built something is
better.

------
ct4ul4u
What are you wearing?

~~~
joshu
I am wearing a red "foo camp" tee shirt from 2007, jeans possibly from j-crew,
and white gym socks I bought at walmart.

a year or two ago I threw out all my mismatched pairs of socks and bought all
identical white socks. now I do not have to match and fold the socks when
washing them. I just pile them into the drawer.

~~~
pclark
I do the same thing, except I bought lots of socks of different colors from
the same range. Best feeling ever - not having to pair socks. (and being told
you're wearing odd socks like some kind of mad man)

Want to be friends?

~~~
jwegener
I've had the same thought about socks. I've pondered starting a business
around the idea -- pay $100 and we'd send you a few samples of different sock
brands. Then choose the one you want most and we'll send you 30 pairs -- all
you'll need!

Feedback?

~~~
pclark
($100 is a ton of money for socks, most people don't care enough to care about
socks.)

~~~
jwegener
(think market skimming, not market penetration).

------
coryl
Hi Joshu,

1) How aggressive are you in getting deals done? Are you more like "lets have
a chat, sign here" or more like "okay, call me if you ever need funding."?

2) I'm actually working on a site similar to Delicious, <http://www.howl.com>.
Its not quite bookmarking, we call it link blogging. What do you make of the
market? Thanks

~~~
pclark
howl looks neat (good domain) how are you better than tumblr?

~~~
coryl
still figuring that out. I think we're lighter and easier to post with. We
also don't offer any blogging tools other than pasting links. We think we can
do comments and content discovery better.

------
medianama
Thank you for doing this.

~~~
joshu
No problem.

------
jasonlbaptiste
When will you do something outside of tech? ie- food type of establishment (I
see you mention this desire here a lot).

~~~
joshu
When I have a big enough purse that I can invest in things that will almost
certainly lose money (unlike startups, where it's just probable.)

------
staunch
Are you doing it for financial reward or for the enjoyment of it?

~~~
joshu
Probably the second, currently. I haven't seen a lot of return in real
dollars.

------
dzlobin
This applies to me personally, but I'll ask out in the open: Are you
interested in advising young startups?

~~~
joshu
I don't really do advisory boards. It has different compliance hurdles due to
my work situation.

Also, in my experience, startups are bad at fairly compensating their
advisors. I'd agreed to seven or so advisories in the past and actually gotten
paperwork for shares just a single time. One startup actually had me come in
twice for advice and then later told me they decided not to have an advisory
board.

~~~
dzlobin
Gotcha, thanks.

What's a fair equity share for an advisor, btw?

~~~
joshu
I dunno that one. It's typically not much.

~~~
grellas
For a typical advisory board member, usually .1 to .2% of company for a year's
service, typically fully vested on grant (e.g., on a 10M share model, 10K or
20K shares/yr).

This can vary widely, of course, for special cases, but something along these
lines is probably the norm in the Valley. As you note, not much.

~~~
joshu
This is why you hire a venture lawyer and not your uncle's friend's brother.

Hi grellas, I am a fan.

------
Utility
I am thinking about accepting an offer to join a startup with two founders
(one technical, one non-technical) to be the first employee in a Biz Dev role.
The company has no funding and a prototype will release in 1 month. I think
the founders have been working for 5-6 months on it (probably 75% of their
time in total).

They offer no salary, but a 1k / month stipend, and a very fair commission
structure for sales revenues I bring in.

They offered me 1.0 - 1.5 % in common stock equity that will vest (as will
theirs) over a typical 4 yr / 1 yr cliff path.

I feel that the equity offered is too low, given that my joining is a risky
investment for me financially, similar to theirs as founders. What do you
think is the appropriate amount of equity to ask for?

~~~
joshu
Would they fail if you didn't hire you?

~~~
Utility
Nope. I estimate that I can add 5% to the likelihood they succeed (which in
itself is small), and about 20% to the upside if they make it.

------
rms
Is Christopher Poole really moot's real/birth name?

~~~
joshu
I will ask to see his birth certificate.

My mother has met Moot... I should demand to meet his mom.

~~~
paulgb
I realize this is getting off-topic from investing, but since that's the
spirit of an AMA, is there an interesting story re: your mother meeting moot?

~~~
joshu
Not really. It was after this event:
<http://www.nytimes.com/2010/04/19/arts/design/19rhizome.html> and I wanted to
go to a diner.

~~~
joshu
Another funny story:

So it must have been 2004 and Stewart from Ludicorp wanted to show me this new
"Flickr" thing they'd built, which was a sort of online flash chat thingy. I'd
logged in and poked around, and said something to the effect of "this is neat,
but I wonder if somebody's mother could use it." Stewart said to call mine and
see what she thought, so I did.

A few minutes later, my mother comes into the chat room that Stewart and I are
talking in. If I recall, nobody else is even logged into the system at the
time.

"Mom, this is Stewart. Stewart, this is my mother."

Stewart says hello, she says hello, etc.

My mother says: "This is very nice, but I have one question."

Stewart: "What's that?"

My mother: "How is this going to make any money?"

~~~
rokhayakebe
The ultimate question. You should have your mom ask that question to all your
portfolio founders.

------
tlrobinson
Why did you get into angel investing?

(also, do you talk to yourself often?)

~~~
joshu
Ha, I was starting to fill out obvious questions that nobody asked, then got
embarassed and deleted it.

I wanted to try to figure out of I was going to be a professional investor
someday. I discovered that the hardest part for me is saying "no" a whole lot.

Yes, I do talk to myself.

------
spoiledtechie
Thanks for Answering... I learned a lot.

------
icey
Rate of good versus bad pitches you get?

~~~
joshu
Actually, I don't see that many that are bad per se, but I don't understand or
like everything I see.

Lots of bad entrepreneurs have problems that prevent me from actually seeing
the pitch itself anyway.

I prefer to see prototypes, anyway. This keeps a LOT of crap out of the way.

~~~
ephermata
What are the problems with bad entrepreneurs that keep you from seeing the
pitch itself?

Thanks for your time answering these questions.

~~~
joshu
\- doesn't have a prototype.

\- will only walk me through the prototype in person.

\- won't even tell me what the product does without a meeting.

\- doesn't know how to communicate (way too verbose often)

\- doesn't have a clear pitch to deliver

I've seen all of these.

------
staunch
Whats the range of your investment size?

~~~
joshu
Almost always $10k-$25k. I am a very small investor.

~~~
jimboyoungblood
Someday you'll grow up.

~~~
joshu
Get this man some upboats. He's just making a joke.

------
david927
Do you ever invest outside of SV? Outside of the US?

~~~
joshu
NYC too. But I'm from there originally.

My one non-dollar-denominated investment is also the sole acquisition from my
portfolio.

~~~
david927
Is there a reason for that? I know that communication is key, but with Skype
and daily builds, couldn't it be managed?

------
agoric
What are the prevailing terms for angel deals you've seen recently, and what
do you consider to be "market" right now?

~~~
joshu
Lots more convertible debt lately, which I am not thrilled about.

Or do you mean numbers? Every deal is different.

~~~
agoric
I've heard of more capped valuations for convertible debt with negotiable
interest and discount rates (and no warrant coverage), but also seen some
angels openly demanding priced rounds. Are such capped convertible notes a
good middle ground for debt that works like equity? Have you seen any that
provide an alternative conversion if no priced round follows?

~~~
joshu
I guess so. I really dislike uncapped notes, obviously. Many notes convert
after a fixed period of time.

------
kevinelliott
I'd like to be an angel one day, but I'm still plumbing away at the
entrepreneur thing first. I'd like to get a few successes under my belt, and
really experience starting and growing the businesses, before I jump into
investing.

What are some things I can be doing now to prepare myself for angel investing?

------
fleaflicker
What do you do at google?

~~~
joshu
Press buttons, mostly.

------
btw0
Will you invest in a Chinese company?

~~~
joshu
I really don't understand the lay of the land there.

------
zxz
<\--- Reddit is that way

~~~
joshu
IAMA is my guilty pleasure.

