Boris Wertz, from Canada’s Version One Venture (investors in one of our favourites – Abebooks, the hard-to-find book website) joins Andreessen Horowitz. Here’s Wertz on Startups outside Silicon Valley:
“a16z: How does being in Canada give you a different perspective?
BW: I wouldn’t say it’s Canada, as much as being outside of Silicon Valley. I think there is Silicon Valley, and then there are smaller ecosystems in places like New York, Toronto, , Seattle and other places. Compared to Silicon Valley, they all lack consistency of deal flow. That said, great companies do get built outside of Silicon Valley, and there are great opportunities. And this is the interesting thing, when you find an entrepreneur outside of the Valley usually they have this extra passion for what they are building because in some ways they have to work much harder to pull it off. They know it’s hard to raise money. They know it’s even harder to build a company. Yet they are still doing it.
a16z: Are there any advantages to building a company outside of Silicon Valley?
BW: I think the initial advantage is you have much better access to talent when there isn’t like 20 companies competing for the same people. At the same time, the challenge is lack of senior talent. It is actually a relatively easy to build a great company and these smaller ecosystems up to 20 or 25 people. But when you need to hire the first VP of sales, and the first VP of marketing, you often need to start looking elsewhere. So starting companies is one thing, but scaling is tougher outside of Silicon Valley, often much harder than the initial phase of a company.
a16z: Does that often mean companies need to relocate to Silicon Valley?
Boris: I think it’s a nuanced perspective. If you end up in the enterprise space, I think you need to relocate to where your customers are. There’s just no way where you can build an enterprise company out of the smaller ecosystems today. On the consumer side you just have to think about what’s best for the company. Sometimes that does mean relocation. Sometimes that means putting marketing and sales in the Valley, but keeping your product engineering teams wherever it is you started your company.
a16z: You see all kinds of startups – in all kinds of places – what’s really interesting to you out there?
BW: The things we’re excited about sit in a few areas. The first one connects to what is going on in the hardware revolution. For us it’s the platforms that support hardware companies. So we have invested in companies like IndieGoGo, Upverter and Tindie. We feel like this is an ongoing trend that is just going too accelerate.
The second area that we are focused on is healthcare. For us it feels like this year is the year where the organization of healthcare with the help of technology is at a tipping point. We’re super-interested in is creating networks of patients-to-patients, doctors-to-doctors, and doctor-to-patients. It’s the idea that we can spread knowledge in a much more positive, efficient way among all the players using technology. Another healthcare trend we are focused on is how to serve up and effectively use patient data. Why shouldn’t I carry around all of my blood test results from the last ten years on my phone to help me cholesterol, diabetes, whatever health concern it may be.
The third area of investment focus is around government and employment. What will new forms of government look like? What tasks might be better fulfilled by the private sector and technology?
Then, the last thing we’re interested in at a very high level is mobile. We think there’s still tons of work left where the desktop is not the best user experience and mobile can disrupt the entrenched players. That is something that we continuously watch. It could be mobile encroaching on the enterprise, or it could be a consumer play. We don’t think mobile’s march has yet played out across all verticals.”
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