Note: Angel Profiles is a bi-weekly column appearing on AlleyWatch.
How did you get into angel investing?
I was running a walking tour business here in New York. My partners and I were always playing around with how to make the experience better. We had a lot of ideas and then, with the launch of the iPhone 4, other people started doing it. I got depressed for a bit, that I wasn’t the first mover, that they stole my idea. Obviously they didn’t but they were actually executing when I was just doing walking tours. So I decided to start calling and emailing these people out of the blue and asking them if I could get involved. They said I could invest. I had no idea about seed terms and any of this stuff but I took the plunge, started writing checks, and I got addicted to it.
What was your first angel investment? How did it turn out?
I was doing consulting work for a digital agency downtown that I still advise called Gin Lane Media. They were developing wire frames for me to build an artificial intelligence itinerary generator. I had to go out to LA for work and TechCrunch Disrupt 2011 was feeding live videos of the presentations. I saw this guy present an artificial intelligence itinerary generator called Weotta and it was far better than anything I could have ever done. I emailed one of my friends who was there at the time and said, “Don’t let this guy out of your sight. Don’t let this guy leave until he agrees to take a check from me.” I ended up investing. I called Gin lane and told them to burn the wire frames.
The company is doing really well. The founder is really well networked in the valley and has received investments from far more impressive people than me. It was really a watershed for me because he took a chance on an (at the time) unknown investor when he didn’t have to. More importantly, he has become one of my closest friends, a mentor to me, and has introduced me to more people than anyone else in the tech scene.
What investment do you most want to brag about / why?
Everlater is one of my exits. Two guys travelled the world together and decided they wanted to do a mobile travel journal app. Which failed, as all mobile travel apps do. So they pivoted and became a B2B platform that sold solutions to tourism companies. Rafting trip guides and school trips and things like that could own the content rather than all the content being creating on these trips were going elsewhere – Facebook, Twitter, Instagram.
They got funded by a VC fund in Boise, Idaho called Highway 12 Ventures and were looking for other angels. I remember seeing their pitch deck on Skype while in my in-laws house in France. The last slide in the deck is a picture of them standing on this giant crater. I said, “Where is that? The Atacama Desert?” And they said, “Yeah. You’re the only person we pitched that has actually gotten that.” I wrote them a check for $25K. I had a connection to these people. I couldn’t explain it. I was the only angel to take the plunge along with the VC fund.
Less than a year later they got bought out by AOL Mapquest who, rather than compete with Google Maps, are pivoting to a travel solution.
But why I’m most proud of this is that, while I was helping them through this transaction, they told me, “This deal took longer than we expected. Without your $25K, instead of getting acquired and having a really nice exit, we would have gone bankrupt.”
Notable train wrecks and lessons learned?
<Laughs> Do I have to name the company?
I invested in this company. Four guys, right out of college, hungry as hell, very talented, knew their market. They had ambitious plans and moved out to the valley. A couple friends and I were the first money in for $50K each. They raised about $1M in 9 months… and blew it in 9 months. No investors knew that they had been burning money like this. Maybe their advisors knew but none of the investors.
First lesson learned: If a company has really impressive advisors but none of them are writing checks, figure out what is going on.
We were told they were going to merge. Basically, it would have been like a talent merger. We were excited because the company that was coming on had a very talented IOS person. The team continued to look impressive on paper. It should have been a red flag how excessively aggressive the CEO was but I looked at it as being stupidly hungry, really wanting it. There’s a fine line there.
Second lesson learned: Try to figure out where hunger ends and excessive asshole-ish behavior begins.
Then I get a call from him saying, “The guy who was going to merge reviewed the bank statements decided to back out at the last minute. The other two cofounders also backed out. The company is folding. We have no money. We’re $150K in debt.” They had been spending money like crazy. We found out the company had bought a $60K automobile.
Third lesson learned: Monitor how your companies are spending money if you can.
Then it was just a shit-storm. The founders were threatening to sue each other. We were thinking of seeking legal action but there was no money to be recouped. The founder would fire off these emails insulting a lot of the investors, calling them names. The company folded.
Fourth lesson learned: Do your diligence on founders.
What startups have you backed that should have hit but didn’t and why not?
There are plenty that didn’t hit but I don’t know why.
What’s the most humbling or frustrating experience you have had relating to angel investing?
There was a company I had been working with on and off for about a year and had a very good relationship with. I always told them, “Whenever you guys are raising money let me know. I love your product, want to work with you.” They get into Techstars. All is good. Then they raise a sizable seed round and I get a call, “We are kicking about 10 angels out. The lead investor doesn’t want that many angels in the deal.”
Your day job is at a real estate development company. How does that compare to angel investing?
My dad is in real estate so I have always been around it but I hadn’t worked in real estate until after angel investing.
It is a completely different world. In IT, you incubate a concept and in two weeks you have a products. In another two weeks you raise a round. Then you sell the company two weeks later. Millennium Partners does large scale, mixed-use development. These projects take ten years: Three years to get your entitlements, two years to get your financing, three years to actually build the building, and then another three years to sell it out. So it is a very long slug and I come in and out of deals at times when I can add value. It’s very, very different.
Where it helps is that there are a lot of very interesting start-ups popping up in real estate tech. For the first time real estate is starting to embrace enterprise products. I have been lucky enough to participate in a couple of those deals and I hope to do many more. I am even thinking about incubating my own real estate SaaS product right now.
You were a Senior Associate at ENIAC Ventures for a while. How was that?
ENIAC is a small fund and this was not a typical kind of Associate position. The partners all have full-time jobs, I had a full-time job.
How I got involved with them is pretty funny actually. I met Aamer Abdulla, a very active angel, who invested in Vic Singh’s company Tracks, a photo sharing solution. [note: Vic is also General Partner at ENIAC.] Aamer thought I should take a look, introduced me to Vic, and we really hit it off. At the end of the meeting he said, “So can you write a check?” I said, “I’ll write a check Vic, but only if you let me intern for you at ENIAC”. He said, “I can’t do that but I’ll introduce you to the other partners. If they like you, they’ll show you the ropes.”
Pretend that it’s 2019 and complete this sentence, “[Technology X] is less than 5 years old and now I can’t imagine life without it.”
My smart fridge. It is going to have spots in it for everything – water, milk, orange juice, cheese, whatever. Whenever things get taken away for a specific amount of time (viz., eaten), it will automatically be delivered to my house so I can put it back in my fridge. Automatically replenished.
The other thing is my personal, flying drone. He takes out the garbage for me. He mails letters for me. (It is only 2019 so there will still be letters.) My hovering personal butler. I can’t imagine life without him.
What’s the best way for entrepreneurs to reach out to you?
Get a warm introduction. If you can’t do that, I am unlikely to invest. My AngelList profile is a pretty substantial guide to my past investments and you can find someone who is friendly with me via Linkedin.
If you are an active NY-area angel (or know someone who is) and would like to be profiled for AlleyWatch, please contact me here.