Investor Profile: Andrew Parker — General Partner at Spark Capital
We are excited to announce our newest series called Investor Profiles! The goal of this series is two fold. First, we are going to dive into the backgrounds the local investors in Boston. For example, what is their background? How did they get into venture capital? Plus, lots of other useful information. Second, we are looking to make this information useful to entrepreneurs in terms of targeting investors who could be a good fit for your business. I also think this content is incredibly useful to help you prepare for any meetings that you might have with the profiled investor.
First up, we have: Andrew Parker, who is a General Partner at Spark Capital. His Boston investments include Quantopian and Panorama Education. Spark Capital is a bicoastal, early & growth stage venture capital firm that invests in startups led by creative thinkers. They have backed companies such as Oculus, Postmates, Slack, Tumblr, Twitter, Warby Parker, Wayfair, and Wealthfront.
1. Tell us about your background — where did you grow up…how did you end up at Stanford… what did you do before becoming a VC?
I grew up in the Boston suburbs. I went to Belmont Hill for high school, which was a terrific experience, but I knew I didn’t want to stay local for college. I was lucky enough to be accepted to Stanford. I’m not sure how I conned my way in.
It was a crazy time to enter Silicon Valley because my first day on campus was 10 days after 9/11, and all of Silicon Valley was in mourning for both the nation and also the tech bubble, which had burst. All the graduating seniors were stressed out about trying to find jobs that fall, and no one was talking about startups or opportunities in internet companies. Google was still really nascent but also no longer a part of the Stanford campus at all. It was a wild contrast to the Stanford campus that exists today where every incoming CS major is simultaneously working on two startup ideas on the side.
I graduated in 2005, and the job market in the valley had significantly improved by then, so I took at job doing product design and product management work at a company called Homestead. They helped small businesses create and host websites. It was before Wix and Squarespace. It wasn’t a startup in that it had been around for 8 years by the time I joined, but it wasn’t a big company either because there were around 40 employees then. It was a great first job where I had the opportunity to learn the difficulty of building products. You have to have a slightly obsessive nature to build awesome software because you need a meticulous attention to detail. I remember plenty of late nights with my nose two inches away from my monitor making sure that my designs were pixel perfect. I learned to appreciate the detail-oriented nature of great product design first hand.
2. How did you get into venture capital?
I left Homestead after a year in order to pursue a Masters degree in computer science from Columbia with a focus on machine vision. I chose Columbia because I was chasing my girlfriend (now wife! :) ) across the country where she had been admitted for medical school. I was one week away from enrollment when I fell over backwards on the opportunity to work for Fred Wilson and Brad Burnham at Union Square Ventures.
I was very lucky to get the job. I applied through a blog post on the firm’s website in the comments section. I recall there were roughly 70 other comments asking for interviews, including my own. They didn’t want (and never received) my resume or any references. Instead the first level of screening was simply evaluating my web presence (where I existed online). I passed that and they brought me in for a 45 minute interview. The interview was driven off of one question: “Do you think there will be a compelling mobile web browsing experience in the near future?” It was 2006 and the iPhone didn’t exist. The state of the art in mobile web browsing was a Blackberry 7250 (the hockey puck with the scroll wheel on the side) with a Blazer browser. It took 3 minutes to load Fandango and any attempt to actually purchase a movie ticket over mobile would fail. I answered “No.” My reasoning was the the problem was screen real-estate constrained… there was no good way to take websites optimized for 1024x768 desktops and make them usable on our puny 2.5” grainy screens. We’d have to reinvent the web, which is essentially what WAP was doing at the time.
Clearly, in hindsight, I was dead wrong. But Fred and Brad enjoyed the conversation enough I guess to offer me a job the next day. I accepted before I even thought to ask what was my compensation.
I never found out what it was exactly that landed me the job at USV. I’m sure luck was a big part of it. But I know that Fred and Brad would not have paid attention to my blog comment if I had not had a strong web presence. I maintain my web presence (myTumblelog and my tweets) mainly for myself and the value I get from my readers’ inputs. It also is helpful as a calling card to strangers so they can get a flavor of my thoughts and personality before they ever meet me IRL.
3. What stage of investments do you primarily target?
I primarily make initial investments at the Series A and Seed stages. I’ve led two deal at the Series B stage, but my primary focus at Spark Capital is earlier stage companies. The earliest stages are where I think I can be most helpful to founders and also where my interest is highest.
4. What are the top traits you look for in terms of investing into a company or founder?
The founders are the most important part of an investment decision. Are these people hungry to make a big impact on the world? Do they complement each other well? What is the mission that drives them? Can they evangelize their mission in a persuasive way that will make talented folks want to work for them?
If the business is more than just two people in a garage with a case of Red Bull and a flat of ramen, then the next most important piece of criteria is the product. Is the product *great*? Does it make people in their target audience sing their praises to others? The product is a reflection on the team at the end of the day, because it explains what the team is capable of building.
5. What sectors of technology, industries, or trends are of interest to you?
The companies I’ve backed to date are in a wide variety of industries, and I’m sure my future investments will be in new sectors I haven’t previously explored.
In terms of themes, I love companies that are creating new markets as opposed to stealing share of an existing market. Market creation is wildly ambitious, and it’s often hard to see at the earliest stages, but this circles back to a founder’s ability to evangelize their mission. If they have this skill set, then they should be able to paint a picture of a world where customers demand their product in a way that’s unlike anything that happens today; that’s essential to market creation. Market stealing is trying to grab market share from an existing set of competitors in a defined market that is unlikely to expand beyond existing growth. I much prefer to work with companies that aspire to create new markets.
I also love companies that have some form of compounding asset to them. This could be a network effect (like how a communication network becomes more valuable as more people attach). This could be a data asset that gets increasingly valuable with density (like how machine learning models make better predictions as their training sets improve in density and richness). Or this compounding asset could exist in distribution (SEO has a natural compounding effect as it continues to get stronger because more inbound traffic is often correlated with the creation of more high quality inbound links in the future). Each company can find their own way to create a compounding asset… there isn’t just one formula. But if an asset like this doesn’t exist, it’s harder for me to get excited about the company.
Spark broadly (myself included) looks for companies founded by creative thinkers. We seek to partner with technologists that have the heart of an artist. We think the best companies rise above the crowd through great product execution, and the best products come from the right balance of art and technology. So, that balance of art and tech is constantly a part of my lens when evaluating new investment opportunities.
6. What is the current fund that you are investing from?
It’s a $450MM fund. The fourth in series since the founding of Spark Capital in 2005.
7. You are an investor and a board member at Boston based Quantopian. What got you excited to invest in them?
That is the earliest I have worked with a company… it was John Fawcett (Fawce) and a prototype that had to be completely rebuilt from scratch at the time I led their seed round. I was excited by Fawce first and foremost. He’s an experienced entrepreneur with an incredibly infectious positive attitude, and he painted a really bold vision for me about the dent he wanted to make in the universe. I’m so glad I got the privilege to partner with him.
If you want to know exactly what I was thinking when I made this investment (and any others), I wrote in concrete my investment thesis. Whenever I make an investment, I write a summary of my thesis in a blog post announcing the investment. And then I place a link to that thesis on the left rail of my blog. So, I’ll always be accountable to what I was thinking when I wrote each check. I’m hoping this transparency and intellectual honesty will make me a better investor.
8. What companies in Boston, outside of your portfolio, do you find interesting?
My father works in startups on the life sciences side of the market. He helped co-found a co-working facility for affordable startup lab space specifically for early stage biotech companies in Kendall Square called LabCentral. I think it’s one of the most exciting companies in Boston because of the impact it’s having on local biotech innovation. We have an ecosystem as exciting as Silicon Valley in Cambridge in the Life Sciences industry, and we should celebrate it more. LabCentral is a non-profit, so I’m not sure if it’s a perfect fit to this question, but I think this model is really innovative… it’s a novel take on making early stage life sciences less capital intensive, and they’re helping entrepreneurs spin IP out of academia earlier than might otherwise be possible.
9. Since you invest in companies in NYC and SF, how does the market in Boston compare?
I’ll go anywhere for a good deal. I’ve invested in LA, SF, NYC, Boston, and Waterloo so far, and I’m not opposed to more new geographies. Companies should primarily choose to be based where (A) they can best recruit and (B) they can best acquire customers (in that order).
As for NYC and SF versus Boston, I think the biggest difference is attitude. Entrepreneurs in Boston have had much bigger historical exits (even in recent history) than NYC, but they’re more dour about their outcomes, and in general Boston doesn’t celebrate their big wins much. Eric Paley makes this argument much better than myself and is trying to fix this issue with his series of live events interviewing successful Boston entrepreneurs.
10. Without giving names, what’s the funniest pitch story that you’ve heard or a strange meeting with an entrepreneur?
I don’t know about funny or strange, but my best (and most unusual) pitch meeting ever was with the Ian Hogarth and his co-founders at Songkick in the context of their post-YC seed round. They gave us (Fred Wilson and myself) a mixtape as a “business plan” (which was an *excellent* mix). The pitch meeting was a demo of the product, which means the founders used their product to pick a concert for us to go to, and then we all went together. It was a show by The Field out in Williamsburg Brooklyn. We talked about their business over BBQ weighed by the pound and pitchers of pilsner, and then the show itself was mostly social. It was great!
Songkick today is an incredibly impressive company, a real force in the ticketing market. Unfortunately, this great pitch meeting didn’t result in an investment (I’m sure Fred wishes it had today… I know I am kicking myself).
11. Greatest misses — what company(ies) have you passed on that you wish you hadn’t?
I don’t want to disrespect anyone’s confidentiality in pitching me, so I don’t think I should use a recent example. But both Fred Wilson and Paul Graham have both published a couple blog posts about the process in which Union Square Ventures missed out on AirBnB seed round in 2008. Those posts are great, and it was a remarkably dumb pass. Basically, Fred and I in the middle of the meeting with the three co-founders did a Total Addressable Market (TAM) analysis on the back of an envelope with the help of the founders in the room. The number we came up with sounded pretty small, and we passed largely for that reason. I say it’s dumb in retrospect because a TAM analysis is a really silly way to analyze a company that is expanding a market, or even better, creating a whole new market that didn’t previously exist. I hope I won’t make that type of mistake again (but I’m human).
12. Who do you admire or who has been the greatest mentor for you?
All the partners I’ve worked with across both Spark Capital and Union Square Ventures have helped shaped me as an investor in one way or another. Venture captial is best learned in an apprenticeship model, and I’ve since passed on some of those learnings to analysts and associates too.
As for admiration from afar… sci-fi authors in general. I love their visions; I find them really inspiring and stimulating. Neal Stephenson, Vernor Vinge, and Ted Chiang are probably my core favorites, but there’s a bunch more that have made an impact on how I think.
13. Outside of being a VC, what are you personal interests or activities?
I love hiking or other outdoorsy adventures. I try to get out of the country to somewhere really different at least once a year. Traveling gives me wonderful new thoughts and experiences that significant impact my perspective. I really had a poor understanding of middle east politics before visiting Jordan and Jerusalem for example, and I’m really grateful for that experience.
14. What type of music do you like? What was the last concert that you went to? OR… what was the last book that you read or movie that you saw?
The last book that really made my mind spin was The Peripheral by William Gibson. It takes a lot of everyday, current technology like drones and VR and then extrapolates where they could go in the near future to create a really wild future. It’s a dystopia, which I don’t love about sci-fi (I think writing about dystopias are a bit lazy… See Neal Stephenson’s Diamond Age as a nice contrast), but aside from that one issue, The Peripheral is terrific.
15. Are you involved in any charitable organizations?
My wife and I like to support the Animal Rescue League (ARL) here in Boston. They’re a great organization that have a network of humane animal shelters around Massachusetts. I’d highly recommend checking them out if you are sympathetic to this cause.